NICOLAS BRULLIARD, DOW JONES NEWSWIRES, AUGUST 3, 2006
WASHINGTON — Four executives of Dow Chemical Co., including its chief executive, reported buying company stock just days after its second-quarter earnings release sent its stock price down 10 percent.
Dow Chemical spokesman Chris Huntley said the recent drop in stock price provided the executives with a “tremendous opportunity” to invest in their company’s stock.
“They absolutely believe the strategy is right, that it’s working, and that the stock at the moment represents a really good financial opportunity,” Huntley said.
The insiders reported spending a combined $1.58 million, or an average of $34.29 a share, to buy a total of 46,000 shares, according to data provider Washington Service and filings with the Securities and Exchange Commission.
Shares of the Midland, Mich.-based chemical company dropped 10 percent to $33.54 on Thursday after Dow Chemical said increased costs for raw materials and energy reduced its second-quarter net income and it warned that it would be difficult to meet previously issued 2006 forecast.
Chairman and Chief Executive Andrew N. Liveris reported buying 20,000 Dow Chemical shares on Monday, along with Geoffery E. Merszei, who reported buying 15,000 shares.
General Counsel Charles J. Kalil reported buying 10,000 shares on Tuesday, and Corporate Vice President Phillip H. Cook reported buying 1,000 shares, also on Tuesday.
Huntley, Dow Chemical’s spokesman, also said company executives are required to meet stock ownership requirements.
“This is what’s expected of people who run the company, that they’ll invest and put their money in the company as they go forward,” he said.
In its most recent proxy statement filed in March, Dow Chemical said executives are typically expected to hold the equivalent of three to four times their salary in stock within four years of their promotion. Each additional promotion gives them more time to comply with the requirement.
Liveris, who became chief executive in November 2004 and assumed the additional title of chairman earlier this year, is required to hold stock equivalent to six times his annual salary and has until November 2010 to do so, according to Dow Chemical’s proxy.
Liveris’ salary for 2005 was about $1.09 million, according to the proxy. After his recent stock purchase, Liveris had direct ownership over 185,943 shares and indirect ownership over an additional 1,145 shares.
Based on the recent trading price of $35.02, Liveris’ direct and indirect holdings in Dow Chemical stock are valued at about $6.55 million.
Dow Chemical shares closed up 74 cents, or 2.2 percent, at $35.01 on the New York Stock Exchange.