BlackBerry Ltd. BB-T chief executive officer John Chen plans to sell about a third of his shares in the company over the coming year, worth about US$22-million at current prices.
His sales plan is aided by last year’s meme stock craze, which pushed BlackBerry’s share price temporarily higher. That triggered the performance target for Mr. Chen’s 2018 grant of shares and opened the door for him to sell part of his holdings.
The company disclosed Mr. Chen’s plans in a securities filing Wednesday. Mr. Chen’s trading plan, developed to comply with U.S. and Canadian securities laws, starts in March and is planned to end in February, 2023. The arm’s-length plan allows Mr. Chen to sell up to 2.9 million shares of BlackBerry, but he has no discretion over when the shares are sold once the plan starts. The plan has a formula with minimum price thresholds for sales. If he wants to change the plan or end it, he must give 30 days notice.
Automatic-sales plans such as these allow company insiders to sell stock without the risk they’ll be accused of illegal insider trading, or selling the shares while knowing of important company news that hasn’t yet been disclosed to the public.
BlackBerry has made stock awards the key part of Mr. Chen’s compensation since his arrival as CEO in 2013. But even though Mr. Chen has already made US$96.5-million from selling about 10.8 million BlackBerry shares, the stock has been unable to mount sustained gains over the past eight years of his leadership.
The company once known as Research in Motion Ltd. has spent the past decade building on the strength of the secure messaging its BlackBerry handsets were once known for. Securing data transmission, particularly for enterprise customers, is now one of the company’s core business lines, as is connected-car technology. BlackBerry said in January it well receive US$600-million from a sale of its legacy smartphone patents to a U.S. firm.
Upon Mr. Chen’s arrival in November, 2013, the company gave him 13 million shares of restricted stock that “vested,” or became sellable, gradually over the following five years. The company valued that award at about US$85-million, based on the share price of US$6.52 at the time. Mr. Chen has yet to finish selling those shares.
In 2018, the company gave him 10 million more shares as an “extension award,” valuing them at about US$106-million, based on the share price at the time of a little less than US$11. Half the shares would only vest if BlackBerry stock advanced significantly – 50 per cent to nearly 90 per cent – over the next several years. Some of these shares would be covered by the new sales plan.
The bizarre “meme stocks” craze of early 2021 gave Mr. Chen a gift.
In late January last year, BlackBerry’s New York Stock Exchange-traded shares rose from US$7.44 to a high of US$28.77 in a matter of days. Most of the gains were gone by March, but the frenzy lasted just long enough for the average price of BlackBerry to top US$18 for 10 days – triggering the vesting of three million performance-based shares.
Mr. Chen currently owns about six million shares, plus three million shares held in family trusts. If he stays through November, 2023, two million shares of restricted stock will vest. He can receive two million more performance shares if BlackBerry reaches US$19 and US$20 per share in the coming years.
At around US$7.50 in Wednesday’s trading, BlackBerry’s U.S.-listed shares are up about 15 per cent in the eight-plus years since Mr. Chen’s arrival. The TSX-listed shares are up about 36 per cent, thanks to the decline in the value of the Canadian dollar. That return ranks it 152nd among the 199 members of the S&P/TSX Composite that have been trading over that time, according to S&P Global Market Intelligence.
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David Milstead