Several of Great Western Financial Corp.'s directors and senior executives sold significant blocks of stock in the company just weeks-in some cases just one business day-before H.F. Ahmanson & Co. made its hostile offer.
According to public filings compiled by CDA/Investnet, James F. Montgomery, Great Western's chairman, disposed of more than 110,000 shares in the three weeks before Ahmanson's offer on Feb. 17.
Other sellers included John F. Maher, the company's chief executive; Michael M. Pappas, head of the consumer finance group; Carl F. Geuther, chief financial officer; William A. Schenck, a vice chairman; and Lance J. Erikson, general counsel.
Most of the executives were exercising stock options.
For example on Feb. 14, a Friday, Mr. Montgomery exercised 60,900 stock options, paying $14.75 per share and selling 10,000 shares at $35, and 50,900 shares at $34.75.
The transactions brought him $1.2 million. After Great Western was put in play the following Monday, the stock soared by more than $10 to $44.875.
If he had held on for just one more business day, Mr. Montgomery would have had another $614,112 in his pocket.
Mr. Maher and Mr. Geuther also chose to sell on Valentine's Day, exercising 6,155 stock options each.
A person in the Great Western camp pointed out that the selling by the company's top management in January and February undermines Ahmanson's recent allegation that Great Western previously was considering a merger with Washington Mutual Inc.
Ahmanson made that charge in a lawsuit filed March 21, alleging that Great Western granted its top people more stock options than normal in 1996 in anticipation of a merger with Washington Mutual.
Such action would have violated one of the conditions of a pooling-of- interests form of accounting, which Washington Mutual has said it would use to acquire Great Western.
Great Western agreed March 5 to the merger with Washington Mutual.
Great Western has denounced Ahmanson's charges and said the recent selling indicates its officials were not anticipating a merger.
A Great Western spokesman said Mr. Montgomery's sales were probably made for estate planning purposes.