Macquarie staff grab shares after stock price spike
Bank staff bought more than 60,800 shares worth $3.72 million under the employee options program since its half-yearly profit result in early November, an increase of almost two-thirds compared to the same period last year.
Documents filed with the stock exchange show the purchases have delivered a healthy paper profit to staff, as most of the options had a "strike price" of less than $37, compared to Macquarie shares' closing price of $54.18 on Friday.
It comes after a 70 per cent surge in Macquarie shares over the past year, as the bank benefits from the lift in global market conditions and increased corporate activity.
In a sign of the improving fortunes for Macquarie shareholders - and staff - the investment bank is on track to make $1 billion in full-year profit for the first time since 2010.
Stock options, granted to staff as an incentive, allow employees to purchase shares at below their market price provided certain hurdles have been cleared.
While options have gone out of fashion as a reward for top executives in recent years, with Macquarie phasing them out after the global financial crisis, previously granted options that have not yet expired can still allow longer-term staff to cash in on a rising share price.
The purchase price for the shares bought under the options program in November was $2.25 million - a paper profit of $1.47 million.
Despite the trend, the value of options being exercised by staff is still well below the bumper days before the global financial crisis, after Macquarie stopped issuing new options under an overhaul of its remuneration policies in 2009.
According to Macquarie's annual report in March, there were 8.7 million stock options outstanding, but these were set to expire by March 2014.
In November the investment bank said its half-year profits rose 39 per cent to $501 million and it announced a plan to distribute its $1.4 billion stake in Sydney Airport to investors by giving them one share in the airport for each share held in the bank. Shareholders will vote on the proposal next week.
Frequently Asked Questions about this Article…
Macquarie Group staff are buying more shares due to a recovery in global market confidence, which has led to a significant increase in the company's stock price. This has made exercising stock options more attractive for employees.
Macquarie staff have purchased more than 60,800 shares worth $3.72 million under the employee options program since the company's half-yearly profit announcement in early November.
The 'strike price' is significant because it allows employees to purchase shares at a price lower than the current market value. Most of the options had a strike price of less than $37, while Macquarie shares closed at $54.18, providing a healthy paper profit for staff.
Macquarie's stock price has surged by 70% over the past year, benefiting from improved global market conditions and increased corporate activity.
Macquarie Group is on track to make $1 billion in full-year profit for the first time since 2010, indicating improving fortunes for the company and its shareholders.
Stock options have become less popular for executives at Macquarie because the company phased them out after the global financial crisis as part of an overhaul of its remuneration policies in 2009.
As of March, Macquarie had 8.7 million stock options outstanding, but these are set to expire by March 2014.
In November, Macquarie announced that its half-year profits rose by 39% to $501 million. Additionally, the company plans to distribute its $1.4 billion stake in Sydney Airport to investors, with shareholders set to vote on the proposal soon.
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