In a sign that makes shareholders grimace and employees worry about the fate of their company, Northwest Airlines Inc.'s top brass have shed more than 7 million shares of the airline's stock in recent months.
Most of the activity came from the company's two largest shareholders, Chairman Gary Wilson and former director Alfred Checchi -- the two men who led a buyout of Northwest in 1989.
In Checchi's case, the former Northwest cochairman and director sold most of his stock during the first four months of the year.
In mid-January, Checchi owned 4.7 million shares. By the end of April, when Checchi left the board, he sold 4.1 million shares, leaving him with 630,501 shares plus another 480,465 he owns through a trust. Since January, he sold his shares at prices between $5 and $8.05.
Using the middle point between these two prices, the estimated pretax value of Checchi's transactions could be upward of $26 million.
The two worked at Marriott Corp. before leading a $3.6-billion buyout of Northwest.
They're "certainly hedging their bets right now. They're cashing out their stakes," said airline consultant Darryl Jenkins.
Since the beginning of May, Wilson's shares have dwindled from 4.3 million he owns through a trust to 1.3 million shares last week. He sold those 3 million shares for prices ranging from $5 to $6.80. Using the middle point between them, the estimated pretax value of his sales could be about $17 million. Wilson remains Northwest's largest individual shareholder.
The company has said that stock sales or purchases are personal decisions.
The sales are a bad sign to investors, said Nell Minow, editor of the Corporate Library, a corporate governance firm based in Portland, Maine.
"We want them to put their money where their mouth is," she said. "We want them to be awake every night thinking about the share value." Minow said insiders should keep their stock for three years after they leave the company, so shareholders know they aren't making short-term decisions before taking off.
Other Northwest insiders have sold stock, but not in such huge amounts.
Since May 2, CEO Doug Steenland has sold about 10% of his holdings, or 53,926 shares. As of June 9, Steenland said he owned 486,666 shares.
Director Frederic Malek, part of Wilson and Checchi's team when they took over the airline, sold 40,000 shares, or about 21% of his holdings, since May 2. He owns 134,339 shares, plus another 10,000 through a trust.
The sales also drew criticism from at least one union which is being asked for $143 million in annual concessions to help keep Northwest out of bankruptcy court.
"I like to call it the great executive stock dump," said Peter Fiske, a member of the executive board of the Professional Flight Attendants Association, which represents more than 3,500 Northwest flight attendants based at Metro Airport and nearly 10,000 across the country. "They continue to cash in and rake in millions. At the same time they're knocking on our door for concessions."
The airline, which has the highest costs in the industry, seeks $800 million in concessions from its unions, or says it could be forced to file for bankruptcy protection like some of its larger competitors.
