CBOE Holdings top executives authorize stock sales

CHICAGO Tue Mar 18, 2014 7:02pm EDT

Edward Tilly, CBOE's CEO, speaks at the Sandler O'Neill + Partners, L.P. Global Exchange and Brokerage Conference in New York June 7, 2013. REUTERS/Brendan McDermid

Edward Tilly, CBOE's CEO, speaks at the Sandler O'Neill + Partners, L.P. Global Exchange and Brokerage Conference in New York June 7, 2013.

Credit: Reuters/Brendan McDermid

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CHICAGO (Reuters) - CBOE Holdings Inc's (CBOE.O) top two executives have each established plans to sell up to 14 percent of their shares in the company, the exchange-operator said on Tuesday, a day after its stock price hit a record high.

The authorizations from Executive Chairman Bill Brodsky and Chief Executive Officer Ed Tilly represent the first time that any of CBOE's top officers have planned to sell stock since the company went public in 2010, spokeswoman Gail Osten said.

"This plan allows them to gradually diversify a portion of their holdings in an orderly, prearranged manner for personal financial and estate planning purposes," she said. "Each remains extremely optimistic about the long-term growth of the company."

CBOE owns the Chicago Board Options Exchange, the largest U.S. stock-options market.

Brodsky, who stepped down as CEO last year, authorized the sale of up to 50,000 shares during the next three months, representing about 14 percent of his holdings, according to a statement from CBOE. Tilly authorized the sale of up to 25,000 shares over the next year, which represents about 14 percent of his holdings.

The executives established plans to sell shares with a brokerage that are subject to pre-determined volume and price parameters, the statement said. Under U.S. securities rules, company insiders can only establish such plans when they do not possess material non-public information.

CBOE shares have climbed 60 percent over the past year and are up 10 percent so far in 2014. The stock fell 2.6 percent to $57.10 on Tuesday after reaching a high of $59.28 on Monday.

If they unloaded all the shares they have authorized for sale at Tuesday's closing price, Brodsky would earn nearly $2.86 million and Tilly would earn $1.43 million.

"I'm sure that corporate officers in general like the idea of diversifying their holdings," said Gaston Ceron, equity analyst for Morningstar. "Generally high ranking officers of a company could be in a position where a lot of their wealth is tied up in a company's stock."

Fourteen percent is a "decent-sized number" for stock sales, Ceron said. However, the executives' interests should remain aligned with investors' interests because they are retaining a majority of their holdings, he said. Ceron added that CBOE's stock price looked "lofty" and pegged its longer-term fair value at $41.

"I actually think it happens to be a very good company," he said of CBOE. "I think the market for their stock has gotten ahead of itself."

CBOE on Tuesday said it will implement nearly non-stop trading for futures on its well-known CBOE Volatility Index, often used as a gauge to measure anxiety in the market, on June 22.

The company, which was fined $6 million last year for failing to properly police its own marketplace, said this month that it would implement tighter rules for traders to help prevent fraud.

(Reporting by Tom Polansek; Editing by Tom Brown)

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