National Semi CEO leaves money on the table…

You’ve no doubt heard by now of Texas Instruments’ (TXN) $6.5 billion deal for National Semiconductor (NSM), that was announced after the market closed yesterday. As the WSJ notes in this piece, the $25 a share price represents a 78% premium over National Semi’s closing price yesterday.

Given that hefty premium, we decided to take a closer look at some of National Semi’s recent filings. And we were a bit surprised to see several Form 4s, including this one filed late yesterday showing that National Semi CEO Donald Macleod sold 257,930 shares at prices no higher than $14.45 a share on March 31, April 1 and yesterday — the very day the deal was announced. Granted, these were 10b5-1 sales, but it still had to hurt to leave that kind of money — about $2.6 million dollars — on the table.

Unfortunately for Macleod, those sales weren’t the only ones. There were two other Form 4s filed since March 16 (see here and here) that show that Macleod sold another 342,000 shares at prices that were never higher than $15 a share, which means that all told he left around $6 million on the table.

Now granted, it’s hard to generate too much sympathy — my grandfather used to say “my piles are bleeding for you” — for a CEO not getting any richer. And, obviously, there’s the not-so-insignificant matter of getting out of a 10b5-1 plan without creating too much of a ruckus. Still, given that Macleod no doubt knew about Texas Instruments’ offer for several weeks, if not months (we’ll learn more details once the Background of the Deal is filed with the SEC), it’s hard not to imagine this hurting just a teensy bit.

Footnoted friend (and master of all things Form 4) Ben Silverman over at Insider Score told us last night that it obviously would have been difficult for Macleod to suddenly drop his 10b5-1 plan without tipping his hat. Ben described this as being somewhat similar to the Angelo Mozilo case, in which the former Countrywide CEO tried to shield himself by claiming that his well-timed sales were just a matter of his 10b5-1 plan. Another friend — Broc Romanek of The Corporate Counsel has written extensively about this here.

For us, these disclosures remind us of why we tend to rely less on Form 4s and more on other types of SEC filings to pick up on the types of hidden signals that companies — and more specifically, their lawyers and accountants — leave in filings. Putting too much stock in Macleod’s trading patterns here would have meant leaving a lot of money on the table here.

Image source: Stepahnie’s Best Shots via Flickr


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