In March, around the one-year anniversary of the live touring shutdown, a group of Live Nation executives exercised stock options for millions of dollars, setting a new record at the company for insider transactions during a fiscal quarter, Billboard has learned.
The options, which were given as compensation and expire if not used, allowed the executives to buy shares at one price and then sell them at a profit if the share price eclipses the option price. Three executives — president Joe Berchtold, chief financial officer Kathy Willard and general counsel Michael Rowles — exercised options in March that generated $59 million from the sale of company stock on the open market.
Live Nation declined to comment for this story.
The first series of transactions, initiated on March 3, generated more than $14 million for the three executives. On March 12, after nine days of transactions, the executives exercised options on approximately 675,000 shares, given as compensation, and sold them on the open market for a combined total of $59 million.
The transactions were all disclosed to the Securities and Exchange Commission and made up only 3.3% of total trading volume during that period at Live Nation, which is unlikely to have a significant impact on the share price.
But the insider transactions during the first quarter are the highest in the history of the company, according to filings with the SEC, and tell a larger story about how a red hot stock market has mostly benefited C-suite executives who have seen the value of their equity holdings rise tremendously, while workers have struggled to stay afloat.
At Live Nation, the pandemic has led to an almost complete shutdown of its touring business, prompting a reduction in revenue of nearly 84% year-over-year in 2020. Thousands of Live Nation’s employees have been laid off, furloughed or asked to take pay cuts over several rounds of deep cuts — enacted in May, June and September. Berchtold, Willard and Rowles agreed to 50% pay cuts at the onset of the pandemic that were later increased to 60% salary reductions.
With revenues down, expectations for the impending return of live music, along with federal spending by both the Trump and Biden administrations, have helped push the company’s stock to record highs. On March 2, Live Nation’s share price reached an all-time high of $94.63 per share (closing that day at $91.75 per share), a 29% increase over December 2019 when shares hit $74.02.
The following day, March 3, Berchtold began exercising stock options which allowed him to buy 117,000 for a share price of $11.69 and 137,700 shares for $20.90 each. From March 10–12, he again purchased 255,000 shares for a price of $20.90 per share. After exercising his purchase option, he then immediately sold the shares on the open market for the going price of $91–$87 per share, netting $45.5 million from options costing him $9.6 million for a profit of approximately $35.9 million.
Willard completed a series of transactions on March 10, approximately three months before her options were set to expire, netting her $6.3 million in profit from share options valued at $7.2 million. Rowles acquired 37,300 shares for $426,712 but sold 73,000 shares worth $6.7 million, netting a $6.3 million profit.
Rapino, the company’s chief executive officer, did not sell any of his stock. Rapino currently owns 2.6 million shares of Live Nation stock valued at $205 million, records show, while Willard holds 253,048 shares worth $20 million.
Jeffrey Hinson, who has been on Live Nation’s board of directors since 2005, sold 10,000 shares on March 4, representing about 15% of his stock in the company, netting him $900,000. Brian Capo withheld about $43,000 worth of shares to cover his tax bill, according to records filed with the SEC.
The pandemic brought on a record number of insider buys from executives taking advantage of low stock prices brought on by a significant share price drop in March 2020. Rapino, who has a 450,000 share option set to expire in July, spent more than $1 million dollars buying up shares at a significantly reduced price during the onset of the pandemic.