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About that Caterpillar pay cut

Looks like CEO Jim Owens won’t be crying any tears: On Dec. 10 he exercised his options on 100,000 shares with a strike price of $31 a share. He disposed of about 82,000 shares with a profit of $12.75 per, according to my math, turning a cool $1.04 million on the transaction, but the SEC filing says he acquired another 18,000 shares that weren’t sold, which would’ve set him back over a half-million (though without seeing his employment contract it’d be impossible to know how that shakes out; I never knew execs used options to actually invest in their own stock; I figured it was just free money).

One juicy tidbit: Owens cashed his options six months before expiration; generally the strategy is to hold as long as humanly possible and exercise at expiration. Makes you wonder what Owens knew that the rest of us didn’t, but that’s always the case with insider sales.

Something else to think about in regards to exec compensation next year: As long as I can remember, Cat traded between the 30s and the 70s. With the stock huddling around 40, I suspect vast oceans of options are underwater, potentially forcing many bigwigs to rely on mere salaries (which are not small, but everybody lives up to their paycheck; some are going to be living down next year.)

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Tom Mangan posted at 11:49 pm December 22nd, 2008 |

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