Nice timing at Nutrisystem…
Late yesterday, Nutrisystem (NTRI) announced a deal with Wal-Mart Stores (WMT) to provide a 14-day starter program that will be available in over 3,200 stores. Because this is the first time that Nutrisystem products will be available in retail stores (as opposed to those incessant commercials) and because it’s Wal-Mart, Nutrisystem stock jumped over 20% today. The program will cost $149 and includes 14 days of meals, access to weight-loss counseling, and Nutrisystem’s online community.
But what’s really interesting about the deal is this Form 4 filed a week ago that notes that Chief Marketing Officer Chris Terrill was granted a whopping 60,000 shares of restricted stock on Sept. 28 – just a week before the big deal with Wal-Mart was announced. The grant priced the shares at $15.91, which makes for a very nice profit.
Granted, the shares vest over four years, so it’s not as if Terrill can turn around and sell today. Still, the timing does seem curious given that we can’t find any similar stock grants for the executive, who was named to the chief marketing job back in June. According to the filing, the 60,000 shares more than double his holdings in the company.
Image source: Nutrisystem
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Posted in Tags: 8Ks, Form 4s, restricted stock |
 5 Comments » |
October 6th, 2009 at 1:29 pm
60,000 shares is a lot of potential for profit. I bet the shares will maintain a higher value than the did even after four years, but that initial jump will be exciting for him. I find it hard to believe that the executive did not receive a high amount as well. Plus that will be one big box for 14 days worth of food!
October 6th, 2009 at 4:06 pm
On first glance, this looks like a great deal. Unfortunately, if you read the complete announcement, you see that you only get a gift card at Walmart. Then you have to go online to register & then wait for them to ship your meals.
I was ready to go over to my local Walmart and pick up my meals and was very disappointed to find I still needed to go online. I might as well start there & save myself a trip.
The price is almost the same as going on QVC and ordering the 28 day package ($307). I hope that I misread the news, but I doubt if I will be the only one that feels tricked into running over to Walmart
October 7th, 2009 at 8:11 am
Maybe the restricted stock grant was a reward for a job well done – setting up the Walmart deal. Maybe that was the price for keeping the executive and making sure the Walmart deal gets signed. Maybe it was completely unrelated. But why is this even curious? You point out that the stock vests over a number of years, so there is no immediate benefit to executive – he has to stick around to realize any value, so the grant obviously was retention value. Whatever dilution results from the grant is most likely completely insignificant given its size. The company disclosed the grant in accordance with the rules so, again, what is the issue? What is curious about this? Do you think the company should have waited until the announcement was made and then made the grant? In that case, the executive would be shortchanged when and if the stock reverts to its mean. That would likely engender bitterness on the part of the executive.
By the way, this is completely unlike a situation where an executive is granted options that immediately vest at an appreciated value upon the occurrence of an event that is known to happen at the time of grant.
October 7th, 2009 at 9:04 am
I’m seeing shares trading around $16.84 this AM, so Mr. Terril was granted stock worth just under a million dollars (to be available in 4 years), and the news seemingly has made it about $56K more valuable.
Earth to Footnoted: $56K executive comp shifts from price changes are as small as could possibly occur given all stocks’ volatility. Very small molehill on a small mountain.
October 7th, 2009 at 9:04 am
@Kevin: I wasn’t suggesting that there was some sort of smoking gun — just that there was curious timing. For all I know, it could have been a reward for a job well done. The beauty about reading filings is that 2 people can read the same document and come away with two different interpretations.