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Tom Kertscher
By Tom Kertscher April 13, 2020

CEOs didn’t resign to trade stock on COVID tip

If Your Time is short

  • The post listed 14 companies. But only two had CEOs who stepped down from their posts, and left their companies, since the coronavirus first surfaced in China.

  • CEOs can resign for any number of reasons, including normal succession planning and mandatory retirement ages, or because of board pressure over subpar performance. CEOs and their companies don’t always disclose the factors involved in leadership changes. 

  • We found no evidence that CEOs’ departures were related to the coronavirus or that they sold company stock after receiving advance information about it.

In late March, several senators faced angry questions about stock sales they made in the days following an intelligence briefing on the coronavirus, and before spreading panic over the virus pummeled U.S. markets. Now there are suspicions online that certain powerful people were tipped off to the threat of the coronavirus in time to protect their finances.

One Facebook post claims that after being tipped off by government officials, the chief executive officers of more than 14 major companies resigned in order to be able to sell stocks they owned.

Here’s the post: 

The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)

Among those listed, we did find two examples of departing CEOs selling company stock, but that was after the outbreak was publicly known, and both were still with their companies. There’s no evidence of any coordinated effort by government officials to give 14 CEOs advance information about the coronavirus that they could use for personal profit. 

Reasons for resignations unclear

CEOs can depart for any number of reasons, including normal succession planning, or moves by the board to shake up leadership. CEOs and companies don’t always go public with all the reasons behind such departures. 

"Just like politicians leaving to spend more time with their families, CEOs’ actual reasons for departure are rarely described accurately," corporate-governance expert Nell Minow, vice chair of ValueEdge Advisors, told PolitiFact.

A public company is required by the Securities and Exchange Commission to explain a CEO’s departure only if the CEO resigned because of a disagreement with the company over operations, policies or practices, or if the CEO was removed for cause, said Douglas Chia, president of Soundboard Governance, a corporate governance consulting firm, and a fellow at Rutgers University’s Center for Corporate Law and Governance. Such rules are in place to protect investors’ rights.

To deter insider trading, CEOs, other senior executives and board members are generally restricted from trading in their own company's stock, except during designated trading windows, Chia said. Those windows usually open in the two weeks immediately after the company’s quarterly earnings report is released. The trades must be cleared with a company’s legal department and reported within two days to the SEC, Chia said.

Overview of the 14 companies cited

The COVID-19 disease can be traced back to Dec. 31, when the government in Wuhan, China, confirmed that health authorities were treating dozens of cases of pneumonia from an unknown cause. Eight days later, China identified it as a new type of coronavirus. The first coronavirus case in the United States was confirmed on Jan. 21.

We found that of the 14 companies listed in the post, only two had corporate CEOs who resigned their posts — and actually left their companies — after the coronavirus surfaced in China.

Another two CEOs sold company stock after the outbreak. At the time of the sales, however, the outbreak was already publicly known, and the CEOs hadn’t yet left their companies. 

We found no evidence the CEOs received advance information about the coronavirus or that they left in order to be freed from regulations that restricted their ability to sell stock.

The 2 who left their companies

Of the corporate CEOs alluded to in the Facebook post, two resigned between Dec. 31, 2019, and March 29, 2020, the date of the post — and left their companies:

  • Harley-Davidson announced Feb. 28 that Matthew Levatich had stepped down as CEO and a director. The company’s shares had fallen 46% since he took charge in May 2015.

  • MGM Resorts announced Feb. 12 that Jim Murren had decided not to serve out his contract, which ran through the end of 2021, but that he would stay on until a successor was named. 

MGM’s announcement, the earlier of the two, came two weeks after the Trump administration suspended entry into the United States by any foreign nationals who had traveled to China in the previous 14 days.

On Feb. 19 and 20, Murren sold more than $22 million of the company’s common stock, at between $32.15 and $32.17 a share, the Las Vegas Review-Journal reported. The sales were made public to the SEC.

About a month later, MGM closed its Las Vegas casinos because of the coronavirus, and Murren acquired 6,000 shares of MGM restricted stock units. On the day Murren’s purchase was disclosed, March 18, the stock price had dropped to $7.14.

But Murren was still CEO during both sets of stock transactions. He stepped down as CEO on March 22, the same day it was announced he would lead a state coronavirus task force formed by Nevada Gov. Steve Sisolak. 

5 out as CEO, but still with company

Five CEOs stepped down from their positions, but were staying with their companies as executive chairman, a top leadership post that typically involves some day-to-day duties in addition to a seat on the board. Companies often say they want the former CEO to stay for a limited period of time to ensure a smooth transition to the new CEO, Chia said. CEOs who resigned but stayed on as executive chairman were still under restrictions for trading in their company’s stock. 

  • Walt Disney’s Robert Iger stepped down Feb. 25 after a 15-year tenure as CEO, but remained with Disney as executive chairman, the company said in a statement

  • Lockheed Martin announced March 16 that Marillyn Hewson would be replaced effective June 15, but that she would remain as executive chairman. She sold $9.5 million in Lockheed stock on Jan. 29.

  • IBM on Jan. 30 announced a new CEO to replace Virginia Rometty. But it said Rometty would continue as executive chairman and serve through the end of 2020, when she would retire after almost 40 years with the company.

  • LinkedIn: announced Feb. 5 that Jeffrey Weiner "decided to take on a new role as executive chairman." He won’t step down as CEO until June 1.

  • Mastercard announced Feb. 25 that Ajay Banga would transition to the position of executive chairman on Jan. 1, 2021, and remain CEO until then. 

3 left before the outbreak

Three of the CEOs cited on the list left their posts or announced their departures before the coronavirus outbreak surfaced.

  • eBay’s Devin Wenig tweeted that his departure was because "it became clear that I was not on the same page as my new Board." That was on Sept. 25, more than three months before the first report out of Wuhan.

  • T-Mobile announced Nov. 18, 2019, that John Legere would depart on April 30.

  • Nissan announced Sept. 9 that Hiroto Saikawa had indicated he was willing to resign and the board asked him to resign, effective Sept. 16. His term was marked by controversy over the arrest of former Nissan Chairman Carlos Ghosn, turmoil with partner Renault SA and a sharp falloff in profits, the Wall Street Journal reported.

Several others don’t fit the Facebook claim

In a few cases, the CEO departures were long-planned, or at a subsidiary level, not at the parent company. And one purported CEO resignation wasn’t that at all.

  • Nestle CEO Mark Schneider is still in place. The post might have been referring to Fernando Mercé. He resigned Feb. 21 as president and CEO of Nestlé Waters North America, a subsidiary, "due to personal reasons," the company told BevNET. 

  • Hulu CEO Randy Freer was stepping down, The Wall Street Journal reported Jan. 31, as new owner Walt Disney Co. integrates the streaming service more closely into its direct-to-consumer business. Freer’s departure had been expected since Disney took over control of Hulu last May, The Verge reported.

  • Volkswagen said Luca de Meo, the head of the automaker’s Spanish brand, SEAT, resigned Jan. 7. He’s becoming the new CEO of Renault. But Herbert Diess, CEO of the parent company, has been in place for two years.

  • Microsoft has had the same CEO, Satya Nadella, since 2014. The company announced March 13 that co-founder Bill Gates stepped down from the board to dedicate more time to his philanthropic activities, but would remain as a technology adviser to Nadella and others in the company. 

Minow said it’s good that executives are required to disclose their personal sales of company stock so that their actions can be scrutinized. But she advocates for rules that would prohibit top executives from selling their company stock until three to five years after they’ve left the company. "We want them to be thinking long term up until the day they leave," she said.

Our ruling

A Facebook post claimed that CEOs of 14 large companies received advance information about the coronavirus and then resigned in order to be freed from restrictions on selling stock.

Among the companies listed, only two of the CEOs resigned after the coronavirus outbreak and left their companies. One sold a large amount of his company stock after his resignation was announced — but while he was still with the company, and well after the outbreak had made news. We found no evidence of any effort to give advance information to the 14 CEOs so that they use it to profit personally.

We rate the claim False.

Our Sources

Facebook, post, March 29, 2020

Reuters, "Partly false claim: The CEOs of these 19 companies stepped down during the Coronavirus outbreak," March 27, 2020

Las Vegas Review-Journal, "MGM CEO Murren sells $22M in company stock," Feb. 25, 2020

Las Vegas Review-Journal, "16 MGM directors, execs buy thousands of shares amid virus stock impact," March 18, 2020

KVVU-TV, "Ex-MGM Resorts CEO Jim Murren to lead Nevada coronavirus task force," April 3, 2020

AAP Fact Check, "CEOs did not leave their jobs in anticipation of COVID-19," March 24, 2020, "Did a Phalanx of Corporate Chief Executive Officers Step Down Ahead of COVID-19?" March 24, 2020

Wall Street Journal, "MGM Resorts CEO Jim Murren Departing Casino Company," Feb. 12, 2020

Harley-Davidson, news release, Feb. 28, 2020

Email, Douglas Chia, president of Soundboard Governance, a corporate governance consulting firm, and a fellow at Rutgers University’s Center for Corporate Law and Governance, April 7, 2020

Email, John Coffee, professor of law and director of the Center on Corporate Governance at Columbia Law School, April 8, 2020

Interview, corporate governance expert Nell Minow, vice chair of ValueEdge Advisors, April 9, 2020

MGM Resorts, news release, Feb. 12, 2020

Milwaukee Journal Sentinel, "Harley-Davidson president and CEO Matt Levatich steps down from company," Feb. 28, 2020

Mastercard, news release, Feb. 25, 2020

Twitter, Devin Wenig tweet, Sept. 25, 2019

Wall Street Journal, "Hulu CEO Randy Freer to Exit as Part of Disney Restructuring," Jan. 31, 2020

IBM, news release, Jan. 30, 2020

The Verge, "Hulu CEO steps down as Disney moves almost everything in house," Jan. 31, 2020

New York Times, "Volkswagen Set to Oust Matthias Müller as C.E.O. After Diesel Scandal," April 10, 2018

Microsoft, news release, March 13, 2020

World Health Organization, "Novel Coronavirus (2019-nCoV) Situation Report 1," Jan. 21, 2020

CNBC, "Volkswagen CEO Matthias Müller steps down, replaced by VW brand chief Herbert Diess," April 12, 2018

Walt Disney Co., news release, Feb. 25, 2020

Nissan, news release, Sept. 9, 2019

Hollywood Reporter, "Kim Masters: Why Did Bob Iger’s Disney Announcement Feel So Rushed?" March 10, 2020

BevNet, "People Moves: Nestlé Waters North America CEO Steps Down," Feb. 20, 2020

LinkedIn, news release, Feb. 5, 2020

T-Mobile, news release, Nov. 18, 2019

MarketWatch, "Mastercard CEO Ajay Banga to step down at year end, chief product officer to assume top job," Feb. 25, 2020

New York Times, Renault Chooses Volkswagen Executive as New C.E.O., Jan. 28, 2020

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CEOs didn’t resign to trade stock on COVID tip

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