Good timing (and bad) at Amerigroup…

Monday’s news that health-insurer WellPoint (WLP) would buy competitor Amerigroup (AGP) sent Amerigroup’s shares up 38% that day, and even drove WellPoint’s shares up more than 3%.

Among those celebrating, presumably, were Amerigroup’s directors, an august group that includes in its number former U.S. Treasury Secretary John Snow and oft-quoted Princeton University healthcare-economics expert Uwe Reinhardt, among others. In addition to the usual pride of accomplishment in bringing a deal like this together, they each had another 2,777 reasons to be happy.

That’s how many shares of Amerigroup stock each director got on June 7. At the time, the shares were worth just shy of $170,000, which is the dollar value of the annual directors’ stock retainer, part of a pay package topping $220,000 last year for most directors, according to the company’s latest proxy filing. Given the pop in the company’s stock with the deal announcement, the deal added about $76,590 to each director’s award — not big bucks, certainly, but a nice little bonus.

Now, we aren’t suggesting anything untoward. It’s clear from the proxy that Amerigroup directors generally collect their restricted shares on the day of the company’s annual meeting (and the shares vest the following April 30). And sure enough, the company reported in an 8-K filed June 11 that it held its annual meeting on June 7, the day of the directors’ stock awards.

A number of company executives also cashed in, but more explicitly: On July 10, the day after the deal was announced, they exercised options that were deeply in the money. Margaret M. Roomsburg, the company’s chief accounting officer, for example, exercised options on 15,000 shares on July 10, at a strike price of $41.60; she sold 16,795 shares the same day at $88.75 — netting her roughly $867,000. Nicholas Pace, the company’s general counsel, exercised 2,447 options with strike prices of $24.54 and $34.44, and sold them at $89.20, netting $154,276.

It’s important to note that the transactions by Roomsburg, Pace and other executives are marked as being made under so-called 10b5-1 plans — essentially a schedule under which executives automatically buy or sell shares on a set schedule without having to worry as much about triggering insider-trading concerns. There have been some suggestions in the past — see this 2006 BusinessWeek article, for example — that some 10b5-1 plans didn’t seem quite as automatic as executives might suggest. In this case, though, the news was out by the time these transactions kicked in.

Not everyone in Amerigroup’s upper echelons had such good timing. A few of executives sold shares shortly before the deal went through. For example, James W. Truess, the company’s chief financial officer, sold 1,500 shares on June 28, at $65.30 a share — $23.49-a-share below Amerigroup’s closing price on the day the WellPoint deal was announced. Like the other executives, Truess’ sales were made under a 10b5-1 trading plan.

You can see all of Amerigroup’s insider-transaction filings at this link. They make for entertaining reading. But for our money, the real entertainment will come with the merger proxy, which will outline all the payouts to Amerigroup executives and directors in under the deal. Stay tuned.

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