Amd Executive and His Stock

Jerry Sanders, the former head and current chairman of AMD, bought 300,000 shares of the stock the other day.

Some have reported this as good news, and I suppose it is.

However, it does bring to attention a less positive point.

AMD executives generally own remarkably little AMD stock. Even when they get it in the form of stock options, they tend to sell it right away when they can.

The peak time for stock activity by AMD execs occurred around May, 2001. AMD was selling at $37, and there were more sales in that month than there’s been in the year-and-a-half since. Lots of AMD exec types cashed in most or even all of their shares at that time.

In contrast, Intel execs have much larger holdings, and while they sell some as they get more, they are much more likely to hang on to at least some.

After the purchase, Mr. Sanders went from owning about 225,000 to about 525,000 shares, which may seem a lot until you realize that AMD has granted him millions and millions of shares in stock options over the years. He still has 3.3 million to exercise, though at the moment, they’re probably worthless.

All those 3.3 million options probably give him the right to buy AMD stock at a price higher than its current price. If that weren’t the case, then he would have just exercised some of his options and held onto the stock rather than buy in the open market.

In contrast, Craig Barrett (CEO of Intel) already owns almost three million shares of INTC and has dibs on another two million plus.

Nobody else at AMD is even close to Jerry. Lately, Hector Ruiz has made a few purchases, but he owned so little of the stock (4,000 shares at the beginning of 2002) that it was embarrassing. Even now, he only owns 48,000 shares, which is worth a little less than $400,000 right now.

That may seem like a lot until you find out how much Hector gets paid.

He gets paid $950,000 no matter what. In 2000 and 2001, one way or the another, AMD put out almost $10 million dollars for the guy. Not counting the $2 million loan they gave the poor unfortunate.

He can afford to buy a few shares of the company paying him.

And he wasn’t even head of the company for most of that period!

What’s scary is that he’s downright cheap help compared to Jerry.

So yes, Jerry Sanders has shown some faith in AMD by his stock purchase (or at least thinks the price of the stock will rebound).

It would be nice if the rest of the AMD execs thought so, too.

Ed