Caterpillar CEO Joseph Creed disclosed his sale of $26.2 million worth of stock on Tuesday, after exercising an options package four and a half years early.
He sold 32,401 shares on the New York Stock Exchange on August 28, emptying his oldest outstanding tranche of options that had a March 2031 expiration date.
The options had a $219.76 strike price — allowing Creed to exercise 72% below the current stock price that regular investors have to pay today.
Creed’s proceeds of $26.2 million had a weighted average of $808.98 per share, slightly below the filing’s $812.98 valuation for shares surrendered to cover his exercise price or tax liability.
He disposed of 12,002 shares under a filing code for paying an exercise price or tax liability. Their value almost exactly matched the grant’s $9.76 million exercise cost.
Even after the incredible payday, Creed’s August 28 sale only reduced his 2021-vintage options grant to zero. In addition, Caterpillar’s proxy filing lists another 110,651 option grants from years 2022-2025, including vested and unvested compensation.
Moreover, he retained ownership of 34,555 shares of stock, plus another 11,839 shares in his 401(k) retirement account.
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Creed sells after post-earnings decline
Creed’s sales occurred a few weeks after Caterpillar’s quarterly earnings report.
A few weeks before he would sell $26.2 million, Creed said, “This is the first time in company history that we have generated over $20 billion in sales and revenues in a single quarter.”
Investors haven’t sustained his optimism. Shares of Caterpillar have shed 16% of their value since their $935 high on the day the company reported those earnings.
Creed’s filing didn’t classify his options exercises and associated stock sales under a predetermined, Rule 10b5-1(c) trading plan.
Since 2023, the SEC has required insiders of public companies to tick a checkbox on their Form 4 filings for transactions following a predetermined trading plan, as well as that plan’s adoption date.
Certain pre-2023 grandfathered trading plans are exempt.
Because Creed’s checkbox remained blank, investors are able to speculate more widely about the discretion he exercised in making these sales, rather than dismiss them immediately as unremarkably predetermined.
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