Mike Manley, CEO of Fiat Chrysler Automobiles, sold over a quarter of his shares in FCA on Tuesday, one day after FCA announced a merger offer for Renault. Manley declared the sale in a filing to the Dutch financial markets authority, AFM. FCA is a Dutch-registered corporation.
Shares in FCA and Renault both jumped Monday, with FCA gaining 8 percent to €12.37 ($13.85) in Milan and Renault rising 12 percent to €56.03 in Paris. Wall Street was closed Monday for Memorial Day, but FCA's New York-traded shares shot up Tuesday, quickly aligning to the Milan price.
In his filing to the AFM, Manley declared selling 250,000 shares at an average price of $13.85 for a total value of $3.5 million. An FCA spokeswoman said Manley sold the shares to “cover a personal financial obligation.”
The FCA proposal to Renault, which is being reviewed by the Renault board, did not make any reference to the merged company's governance and management. According to Reuters, FCA Chairman John Elkann could become chairman of the new entity, while Renault Chairman Jean-Dominique Senard would be CEO. According to the Financial Times, Manley is expected to be named COO.
The sale of FCA shares by Manley this week is not his first. According to filings to the AFM, since becoming CEO of FCA on July 21, just days before the death of his predecessor, Sergio Marchionne, Manley has received 1,388,582 shares as one-time grants and within the company's incentive programs.
He sold 346,423 shares in various transactions from March 14 to March 22, then 97,753 on May 9.
Manley has so far sold 694,176 shares — almost half of the total received — grossing almost $10 million. That amount does not consider income taxes Manley must pay on his compensation or any fees on the transactions.
Marchionne had used share sales on some occasions to cover taxes on his stock grants.
Unlike at some public companies, FCA managers are not formally obliged to keep shares for a certain time. FCA's 2018 annual report published Feb. 22 says, "The board recognizes the critical role that executive stock ownership has in aligning the interests of management with those of shareholders."
It went on to note that Manley's holdings at the time were "significantly greater than common market practice of six times base salary."
Manley still owns 694,406 FCA shares, which are worth $9.4 million at FCA's Wednesday closing price of $13.55; that is just shy of six times his $1.6 million base salary.
The company has taken under advisement a stock ownership and retention policy planned for implementation in 2019, according to the annual report.
Manley sold the stock to cover personal expenses, a Fiat Chrysler spokesman said. The CEO held off carrying out the transaction until after Monday’s announcement of the Renault merger offer to avoid violating insider-trading restrictions, the spokesman said.
Bloomberg contributed to this report