AUBURN HILLS, Mich. -- Chrysler Corp. Chairman Robert Eaton sold $2.8 million in stock last month -- his first sale since 1994 -- a few weeks before he said he expected the auto industry to slow in the coming year.
Eaton was one of 18 Chrysler officers who sold a total of 825,185 shares for a record $27.7 million in October and November.
"A huge amount of their net worth is tied to value of their stock and it is a cyclical stock," said Nicholas Lobaccaro, an analyst with Bear, Stearns & Co.
The sales came shortly after Chrysler's third-quarter earnings crushed Wall Street's estimates and its shares traded near all-time highs.
Shares of the nation's third-largest automaker have jumped 22 percent the past year, but could have trouble keeping up that pace. Eaton said last week that he expected U.S. auto sales to slip next year, and new sport utility vehicles are expected to challenge Chrysler's share of that market.
Most of the executives' sales were tied to their stock options, which allow them to buy a specific number of shares at a certain price, according to Securities and Exchange Commission filings compiled by Washington Service. Chrysler officers have a 10-day window each quarter after earnings are reported in which to exercise their options.
Eaton could not be reached for a comment on the sales, but a company spokesman said the executives sold for a variety of personal finance reasons.
"These guys are doing different things; they are building houses, buying boats, putting kids through college. They are managing their own financial affairs as they need to," said spokesman Steve Harris.
Chrysler shares, which reached a record $36.375 Dec. 10, traded yesterday at $33.875.
Some analysts are optimistic about the prospects for Chrysler's stock, pointing to the Dec. 5 announcement that the company would increase its dividend and stock buyback program.
"I think [Chrysler] will be a slow and steady gainer in this market; I don't think anybody would argue auto stocks are overvalued," said Nicholas Colas, an analyst with CS First Boston.
Chrysler shares trade at 6.8 times current earnings, lower than the 7.8 price-to-earnings multiple accorded to rival General Motors Corp. and 10 for Ford Motor Co.
The company is expected to earn $1.40 a share in the fourth quarter, the average estimate of 18 analysts surveyed by First Call Corp., up from $1.34 a year ago.
Chrysler's sales are up 14 percent this year, but the company may have difficulty maintaining that pace in 1997. Eaton said last week that U.S. auto sales next year would show a decline of about 200,000 vehicles from this year's 15.4 million, as the economy starts to slow.
Eaton paid $8.47 a share for 83,628 shares and sold them Nov. 14 at $33.13 for a $2.1 million profit, according to Washington Service.
Eaton sold another 91,400 shares to pay for the related taxes and transaction fees. None of his options were close to their expiration dates, Harris said.
Among the other big sellers were President Robert Lutz, who was named a vice chairman at the beginning of the month. He sold 32,273 shares Nov. 13 at $33 for a total of $1.1 million.
Thomas Gale, who was promoted to head design and engineering, sold 86,350 shares for $32 to $33 a share for a total of $2.8 million.
And Dennis Pawley, executive vice president in charge of manufacturing, sold 122,114 shares at $33.57 for $4 million.
The other executives who sold after the third quarter are: Rex Franson, Tomas Gale, Robert Liberatore, Arthur Liebler, John MacDonald, Ronald Boltz, Francois Castaing, Thomas Sidlik, Gary Valade, Tomas Gallagher, Tomas Stallkamp, Thomas Denomme, Carlos Lobo, Shamel Rushwin and Thomas Capo.
Pub Date: 12/27/96