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EA CEO Buys $1M in EA Shares
Electronic Arts CEO John Riccitiello has just purchased $1 million (£620,000) worth of shares in the publisher.
A U.S. Securities and Exchange Commission filing said the exec purchased 42,500 shares worth $24.50 each.
Riccitiello now owns 89,794 shares totaling around $2 million, or about 0.03 percent of EA's total shares.
In morning trading, EA shares were flat, trading at $23.40.
He might be making money for himself, but this seems to me more like the sort of thing that company executives do to reassure the markets and financial analysts about the health of their firms, so I doubt that the poke in the eye for EA employees was intentional.
Fact is that if your company's share price is tanking and you've had to announce that you're making compulsory redundancies, a lot of institutional investors will be nervously wondering whether they should dump your stock; it's the sort of situation which could end up in a disastrous sell-off of EA shares that hammers all of the company's remaining shareholders (i.e. its owners, who the company's managers have a responsibility to work on behalf of) and ends up harming its viability permanently, which then harms all remaining employees.
If you ask me this share purchase is Riccitiello's way of saying to the markets: "This may be a rough patch, but I have enough confidence in my company to risk a serious amount of my own money on it bouncing back." That's the sort of message that would have me buying/holding EA stock, were I an investor.
Very dodgy as Mystakill posted but nothing new.
It's very bad timing when staff morale at EA is at an all time low to see work colleagues let go then the CEO buys in loads more stock at rock bottom price in a obvious personal profit making venture.
Perhaps they should spend less on buying up companies and concentrate on making sure they don't make staff redundant.
It's about time (with the huge profits made) that these companies started to act more maturely towards staff when less than great quarter results come in.
I know some guys let go from EA LA recently right after completing work on Red Alert, you work your ass of for finite period of time and then get given the boot after the title ships.
Perhaps a Union such as BECTU would stop this happening as often as it does !
If I had some cash to spare, in light of the economic crisis, I would've bought shares in companies that are stable and basically guaranteed to exist a few years down the road.
I think how low the shares got, for the most part was out of his direct control, and I don't think he'd be able to off load the shares whenever he wants to as there are strict regulations when it comes to executives selling shares in the company they work for.
Long term, it's a smart move, I mean there was even that Variety article about how it'd be a good time for a company like Disney to buy EA at its currently low stock price. That same logic still applies on a much smaller scale as well.
Typical executive strategy:
1) fire employees before holiday sales
2) wait for stock price to drop
3) pick up cheap stocks
4) rake in cash when stock price goes up after holiday earnings are announced
I find it fairly unethical, but, unfortunately, it's nothing new.
This might turn out to be very profitable for him in the future. The financial crisis may currently affect EA's earnings, but the company has build a strong portfolio and brand name and is sure to gain investor's confidence in the future, when investments in the game industry as a whole will start to increase again.
Go John!