Bloomberg News
WASHINGTON - Former Citigroup Inc. vice chairman Robert Lipp and current Wells Fargo & Co. chairman Paul Hazen made millions selling company stock as they moved toward new jobs, regulatory filings show.
Mr. Lipp made about $23.5 million by selling shares acquired through options and disposed of another $96.4 million of stock a month after he stepped down in December as vice chairman of Citigroup, the largest U.S. financial services company, according to filings with the Securities and Exchange Commission.
Mr. Hazen made about $26.3 million from option-related sales in January, days after he said he would retire as Wells' chairman at its annual meeting in April, according to a regulatory filing.
The executives characterized the sales as personal financial planning steps taken as they move into other posts.
Mr. Lipp, who remains on Citi's board, has returned to a previous post as chairman of its Travelers Property Casualty Corp. insurance division. Mr. Hazen is to become chairman of Accel-KKR Inc., a Palo Alto, Calif., company started last year by the venture capital company Accel Partners and the buyout business Kohlberg Kravis Roberts & Co.
"I had three motives" for the stock sales, Mr. Hazen said. "The options are expiring next year and accelerate upon my retirement, so I need to exercise them within a relatively short period. Secondly, I have quite a bit of tax liability, so I sold to get the cash to pay taxes. Finally, I own 1.3 million shares of Wells Fargo, and with my retirement I'm looking for some diversity."
By selling in January, before Citi, Wells, and other banking companies' shares dropped in February and March, Mr. Hazen and Mr. Lipp capitalized on some of the best share prices ever at their companies.
Richard X. Bove, an analyst at Raymond James & Associates Inc. of St. Petersburg, Fla., said banking shares dropped last month because of talk at the time that the Federal Reserve, which had cut overnight rates twice in January, would make no further cuts.
The sector fell again this month on an "overall lack of confidence in the market" and a "generalized belief that banks are going to suffer as a result of problems in the economy," Mr. Bove said.
After reaching as high as $57.38 in January, Citi shares have fallen more than 20%, and Wells shares have dropped about 14% from an all-time high of $56.38 in late December.
