Art Brown, the outgoing chairman of Hecla Mining Co., sold off $1.1 million worth of company stock from his personal portfolio this spring – one of many local mining executives cashing in on higher metals prices.
With gold and silver trading near 25-year highs, the value of mining stocks is rising and executives are seizing the opportunity to capitalize on stock options.
Last month, Brown bought 152,000 Hecla shares, priced at $1.13 to $3.23 per share, through stock options granted in previous years. He sold them the same day for a market price of $6.43 per share. Brown, who retires in three weeks from his chairman post, also sold an additional 20,000 shares of stock that he had owned for longer periods of time.
Insider trading has also been brisk at other local firms. Dennis Wheeler, chairman and CEO of Coeur d’Alene Mines Corp., sold $130,000 worth of company stock from his personal portfolio in March, and recently exercised stock options to purchase another 140,000 shares. Directors and employees of other firms are also buying and selling.
The trades are part of predictable cycles, said Ron Nicklas, president of Pennaluna & Co., a Coeur d’Alene brokerage firm that specializes in mining stocks.
During lean years, when cash is tight, employees often get stock options in lieu of raises, he said. “When these stocks move up a bit … those guys are getting their money.”
Brown, 65, was awarded the stock options about five years ago. He was running out of time to use them before they expired, said Vicki Veltkamp, Hecla’s vice president of investor and public affairs. “He had this very small window of use it, or lose it,” she said.
Hecla was generous with stock options a few years ago, Veltkamp said. During a period of acute downtowns in the mining industry, the board of directors used stock options as incentives to retain good employees and to provide rewards dependent on a company turnaround.
Stock options often sound like a windfalls to outsiders, she said. But after taxes, Brown actually netted about $300,000 from his stock sales this year.
Veltkamp also exercised stock options this year, buying 22,000 shares of stock for $90,000 in March and selling it for $146,000.
“In that example, I actually walked home with about $30,000,” she said.