The six Republic Bank senior executives–three executive directors and three senior officers–sold 311,319 shares worth more than $37.55 million in the nation's largest bank between May 16 and August 28 this year, according to calculations done by the Business Guardian of information that is publicly available on the T&T Stock Exchange Web site.
The Republic insiders selling the bank's stock are senior officers and executive directors, according to the bank's managing director, David Dulal-Whiteway. Republic has three senior officers and three executive directors, according to the company's list of shareholdings of senior officers and directors in its 2013 annual report.
The calculations indicate that senior officers sold 86,260 shares and the three executive directors disposed of 225,062 shares between May 16 and August 28.
The annual report indicates that three executive directors owned 105,315 shares as at the end of September 2013, while the three senior officers identified in the 2013 annual report owned 65,634 shares on the same date.
This probably means that bank insiders acquired a significant number of shares by way of stock options in the bank's 2014 financial year, which runs from October 1, 2013, to September 30, 2014.
Asked to explain why the senior executives sold 311,319 shares in the 14-week period between May 16 and August 28, Dulal-Whiteway said by e-mail on Monday: "These trades are by senior officers and executive directors exercising share options granted, but not exercised three years or more ago.
"Management can exercise their options and keep or sell the resulting shares at their discretion within periods that management and directors are permitted to trade.
"Let me know if you require further clarification."
The Business Guardian did seek further clarification, submitting a list of seven questions, including why did all five of the top management of the bank choose this 14-week period to sell their stock options?
The response, issued by Republic's group general counsel and corporate secretary, Jacqueline Quamina, stated: "The bank has three executive directors and several senior officers. There are more than two senior officers in the bank, see the definition in the Financial Institutions Act. But not all general managers are senior officers, though.
"The times during the year when we permit the executive directors and senior officers and certain other managment to trade shares is strictly regulated and quite limited. With quarterly reporting, shares cannot be traded one month before the release of results and two months before the year end.
"Also, if any of us are working on something that makes us privy to 'non-public information' that could impact the share price, we are prohibited from trading.
"The result is that the period within which these persons are allowed to trade shares tends to be for a short period of time and therefore may happen at the same time.
Republic Bank has two employee incentive plans: a stock option plan for the five senior executives, which received shares valued at about $10 million during the 2013 financial year, which ended on September 30, 2013, employees and a profit sharing scheme for staff that received $94 million for the same period.
Under the stock option plan, the senior executives have the right to purchase a specified number of the bank's ordinary shares at a pre-determined price on or before a pre-determined date, if they meet certain targets.
According to Note 26 (b) of the 2013 annual report: "There is a three-year waiting period after the grant date of options before the grantee may exercise the right to purchase the shares represented by the options. The maximum period within which an option may be exercised is ten years."
This means that the 311,319 shares sold by the Republic Bank insiders between May 16 and August 28, 2014, would have been granted three or more years ago.
But it also leaves open for question why the Republic Bank insiders chose to sell their shares in the 14-week period, when theoretically they had the option of holding them for up to ten more years.
Asked whether she agreed that when insiders sell their shares that that may be an indication that the share price has peaked, Quamina said: "No. It is an indication that the share price is greater than the price at which the option was granted and that the time is a free time and the insider is permited to trade. Also, that the insider might have a need for some cash to pay down debt, pay school fees or buy a car, etc."
She responded "already answered" to a question on why didn't any of the senior management think it appropriate to hold their options for a longer period.
Asked whether the decision by the executive directors and the senior officers to exercise their stock options was based on the unfolding Ghana situation or the MHTL arbitration, Quamina replied: "Absolutely not - MHTL and Ghana are absolutely irrelevant to any such decision."
Some Republic Bank employees have complained to the Guardian that they have found it difficult to sell the shares they received under the profit sharing scheme recently.
Republic's financial performance has been flat or in decline for the last six years. The bank declared profit after tax and non-controlling interest of $1.203 billion in 2008. In the years since then, the bank has not been able to return to the heights of 2008, the year of the global financial crisis, declaring a profit of $1.169 billion in 2013.
The option price shall be the bank's share price at the beginning of the performance period during which the option is earned. The price is calculated as the average closing share price on all trading days during the calendar month, prior to the beginning of the performance period. The process of assessment, calculation of options and approval by the board of directors takes place in the first quarter following the end of the financial year.