Relations with administrators: Aviva, Royal Mail, Deliveroo


Image source: Getty Images

Directors’ trades are essentially insider trading for shares between directors and the companies they work for. These transactions are always made public and are often considered a good indicator of a company’s future prospects. However, they don’t get as much attention as other company news due to their complex nature. Nonetheless, I break down this week’s biggest director deals with three FTSE companies here.

Aviva

Aviva (LSE: AV) is a British multinational insurance company. It has millions of customers in its main markets. Aviva is also the UK’s largest general insurer. This week, an influential executive bought shares through the company’s Global Matching Share Plan.

  • Name: Jason Storah
  • Board position: General Manager
  • Type of transaction: Company shares and counterpart shares
  • Transaction date: July 15, 2022
  • Amount purchased: 38.413602 at £3.93
  • Amount received: 76.827204 at £3.93
  • Total value: £452.70

royal mail

royal mail (LSE: RMG) is Britain’s largest postal and courier services company. The group operates the Royal Mail and GLS brands. It released its first quarter trading update this week. Two director transactions also took place.

  • Name: Mick Jevons
  • Board position: Chief Financial Officer
  • Nature of the transaction: Free shares (2019 free deferred share plan)
  • Transaction date: July 18, 2022
  • Amount purchased: 14,132 @ nil
  • Total value: £N/A

  • Name: Katherine Amsden
  • Directorship: CEO of Mark Amsden, Group General Counsel and Company Secretary
  • Nature of the transaction: Purchase of shares
  • Trade date: July 21, 2022
  • Amount purchased: 34,262 @ £2.92
  • Total value: £99,977.21

Deliveroo

Deliveroo (LSE:ROO) is a British online food delivery company. It operates in over 200 locations across the UK and overseas. In the UK, it is the second largest food delivery platform. In this week’s transaction, a director exercised his option to buy out stock compensation.

  • Name: Adam Miller
  • Board position: Chief Financial Officer
  • Nature of the operation: Free shares
  • Transaction date: July 15, 2022
  • Amount received: 83,400 at £0.85
  • Total value: £70,973.40

  • Name: Adam Miller
  • Board position: Chief Financial Officer
  • Nature of the transaction: Sale of shares to cover tax debts
  • Transaction date: July 15, 2022
  • Amount sold: 40,407 at £0.85
  • Total value: £34,345.95

Types of actions in a SIP

To provide context, there are a few types of shares in a company’s stock incentive plan (SIP). A SIP is an employee plan allowing companies in the UK to flexibly allocate shares to employees. Publicly listed companies normally use this option because it is tax-efficient for both the employer and their employees.

Relations with directors: stock incentive plan
Types of actions within a SIP (Source: BDO.co.uk)

In this week’s director relations, Aviva’s CEO opted to buy partnership stock. Shares offer employees the possibility of buying shares from their salary, before tax deductions. But where shares are offered, the company may also offer counterpart shares. This can go up to a maximum ratio of two free shares in consideration per share purchased, as was the case. That being said, it is important to note that the Consideration Shares normally must be held in a trust for at least three years and held for five years to receive full tax relief. However, these shares may be lost if an employee withdraws their partnership shares from the trust.

In contrast, the financial director of Royal Mail received free shares. This happened under the company’s deferred stock bonus plan from 2019. That said, the director is expected to keep his stock-based awards until he reaches the equivalent of 200% of his salary.

As for the CFO of Deliveroo, he received free shares. It is a form of Restricted Stock Units (RSU). RSUs are a form of equity compensation. It is a promise by the company to allot shares of a company in the future. RSUs are most often used in start-ups. Instead, the cash on its balance sheet is used to grow the business.

Previous No, it's a show that Jordan Peele made for the biggest screen
Next Emmy-winning TV producer's Hull roots still influence his talent for storytelling - The Hull Times