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Eads Shareholders Plan Lawsuit Against Managers  
User currently offlineHalibut From , joined Dec 1969, posts, RR:
Posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2443 times:

Looks like things just got a bit more dicey for some involved at Airbus !

Halibut

http://www.bloomberg.com/apps/news?p...085&sid=aKLanbPnh8rA&refer=europe#

June 16 (Bloomberg) -- Investors in European Aeronautic, Defence & Space Co., Airbus SAS's parent, plan to sue executives for allegedly breaking insider-trading rules when they sold shares before announcing a delay in the A380 plane.

EADS Co-Chief Executive Officer Noel Forgeard, Francois Auque, Jean-Paul Gut, Jussi Itavuori and Stefan Zoller were aware of the manufacturing delay when they sold stock earlier this year, Frederik-Karel Canoy, one of a group of lawyers representing shareholders, said in a telephone interview today. Canoy declined to identify the investors the group represents. The company says the executives complied with all regulations.

[Edited 2006-06-16 16:33:40]

32 replies: All unread, showing first 25:
 
User currently offlineAirTran737 From United States of America, joined Apr 2004, 3702 posts, RR: 12
Reply 1, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2443 times:
Support Airliners.net - become a First Class Member!

Boy, when it rains, it ours. Not a good week for our friends across the pond.


Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 2, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2408 times:

Standard procedure for embittered shareholders of any company which see the value of their shares drop significantly over time nowadays... But their chances for success are close to zero I am afraid.

In general its a good idea to sell your shares too when the CEO of a company does so.


User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 3, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2398 times:

Quoting Halibut (Thread starter):
Looks like things just got a bit more dicey for some involved at Airbus !

I agree with you. When will all of this end? As Airbus fan numero cinqo, I am battered and bruised

They say bad news always comes in threes? Well Airbus has smashed that record these last 2 days alone!

As a senior executive do you not ask yourself what possible value can an investigation into my conduct add to this company? GO NOW, let the business thrive without you. You know who you are!!!


User currently offlineMham001 From United States of America, joined Feb 2005, 3559 posts, RR: 3
Reply 4, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2369 times:

Quoting Slz396 (Reply 2):
Standard procedure for embittered shareholders of any company which see the value of their shares drop significantly over time nowadays... But their chances for success are close to zero I am afraid.

Good for them they don't operate under US rules, they'd already be knee-deep in SEC investigations and well on their way to indictments. Just ask Ken Lay.


User currently offlineNorCalSF From United States of America, joined Jul 2004, 34 posts, RR: 0
Reply 5, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2345 times:

Forgeard, et al., are also being investigated by government regulators for insider trading:

"The embattled French co-CEO of Airbus parent EADS on Friday defended his sale of shares in the company before delays in the superjumbo A380 sent the stock tumbling, calling it an "unfortunate coincidence.

The French stock market regulator AMF said Friday it has been conducting a probe into transactions in European Aeronautics and Defence Space Co., and will include the one by co-chief executive Noel Forgeard. He earned 2.5 million euros ($3.1 million) in profits on the deal."

http://biz.yahoo.com/ap/060616/france_airbus.html?.v=12


User currently offlineFr8Mech From United States of America, joined Sep 2005, 5330 posts, RR: 14
Reply 6, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2345 times:

Quoting Slz396 (Reply 2):
In general its a good idea to sell your shares too when the CEO of a company does so

True, but when the CEO and his family sell their shares, or in this case, buy options and then immediately sell at a substaintial profit, closely followed by news that sends the price plummeting; well, what's a person to think?

Yeah, it could be innocent, but I doubt it. He knew something was up.



When seconds count...the police are minutes away. Never leave your cave without your club.
User currently offlineArt From United Kingdom, joined Feb 2005, 3379 posts, RR: 0
Reply 7, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2329 times:

Quoting Slz396 (Reply 2):
In general its a good idea to sell your shares too when the CEO of a company does so.

Bloomberg excerpt:

"Forgeard used options to buy 108,000 shares at 16.96 euros apiece and 54,000 shares at 15.65 euros each, immediately selling them at 32.01 euros..."

I would have followed in Forgeard's footsteps, had I had the option to buy them at a 50% discount on the market price. Somehow Airbus overlooked offering me the option!


User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 8, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2329 times:

Quoting Mham001 (Reply 4):
Good for them they don't operate under US rules, they'd already be knee-deep in SEC investigations and well on their way to indictments. Just ask Ken Lay.
You're comparing apples to oranges really....

Enron was pure FRAUD, the share value NEVER reflected to companies real value.

Here the dispute is whether the share value of EADS STILL reflected the company's value at the time the board members of EADS sold their shares, or whether they kept it up artificially till they had sold them off....

EADS pretends it only learned about the problems of Airbus with the wiring on the A380 recently and immediately informed the public (including a profit warning for the coming years, which triggered the drop), whereas the embittered EADS shareholders pretend it must have been known to some long before....

Seems some people here are not familiar with OPTIONS.

An option is the right to buy a share LATER at its CURRENT price. This right has off course a certain price, normally a fraction of the current share price. If the shares go up before your option expires, this price was worth paying as you make a nice profit on the option. However, if the shares go down, you (logically) will let your option expire and loose the money you've paid for it.
When you decides to exercise the option, you have to possibilities: either you buy the shares at their old (lower) price in which case you still need to dig up a considerable amount of cash OR alternatively you immediately SELL them and get the difference between the old price and the current price paid to you WITHOUT spending any of your money.
In Europe, OPTIONS are often used to reward managers because this second possibility of exercising the options allows you to avoid having to pay income taxes, social security and pension contributions over it, which easily rise to 70% of the total sum paid. As a general rule, you are only taxed on what you earn, and the only thing you've earned is the value of the option (which is taxed) the huge profits which may follow from it is not certain and thus not income-taxed and since profits through trading shares is not taxed at all, it is basically tax-free from them on! Quite a normal method really, although not for the ordinary blue collar workers of course.

[Edited 2006-06-16 17:17:32]

User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 9, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2292 times:

Quoting EbbUK (Reply 3):
I agree with you. When will all of this end? As Airbus fan numero cinqo, I am battered and bruised

Unfortunately EbbUK,
Things will have have to get worse before things get better . However , this should aid in getting rid of the bad apples ! Namely Noel Forgeard !

Airbus, Parent Blame Each Other Over A380 Delays (by Leelaw Jun 16 2006 in Civil Aviation)

Halibut


User currently offlineWingman From Seychelles, joined May 1999, 2206 posts, RR: 5
Reply 10, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2292 times:

Yes, but you have very senior managers and their family selling shares within a narrow window of time of this news breaking. Some of them are even claiming they had no idea of the production problems in March...??? That would be cause for shareholder suits on its own merit. I believe it was Lagadere who made that particular comment. I mean Christ, these top guys should be looking at 380 production scheduling at least twice a day, there is/was NOTHING more important to EADS and Airbus now or 3 months ago.

Whoever said it above is right, in the US the lot of them would at minimum be facing the real real possibility of indictments and this would NOT be an example of our typically frivolous lawsuits.


User currently offlineZvezda From Lithuania, joined Aug 2004, 10511 posts, RR: 64
Reply 11, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2246 times:

Quoting Fr8Mech (Reply 6):
when the CEO and his family sell their shares, or in this case, buy options and then immediately sell at a substaintial profit, closely followed by news that sends the price plummeting; well, what's a person to think?

That's the board's fault. Incentive options for executives should require that the actual shares be held for at least a year after they are exercised. This is a problem on both sides of the pond.


User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 12, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2225 times:

I am beginning to see that Airbus will have a rather difficult time selling any A380[s] for the foreseeable future . There reputation is still sinking to new lows !

EADS is imploding as we speak !   

Halibut


http://news.independent.co.uk/business/news/article1014055.ece

Quoting The Independent Online Edition:


BAE launches attack on EADS over Airbus superjumbo warning
By Michael Harrison, Business Editor
Published: 15 June 2006

A furious row erupted last night between the two shareholders in Airbus after BAE Systems accused EADS of deliberately trying to depress the value of the company in order to buy out BAE's 20 per cent stake in the European plane maker on the cheap.

EADS shares fell by more than a quarter yesterday, wiping €5.5bn (£3.8bn) from the market capitalisation of the Franco-German aero-space giant after the shock announcement from Airbus that delays in the production of the A380 superjumbo would cut deliveries by two-thirds next year.






[Edited 2006-06-16 17:25:02]

User currently offlineEbbUK From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2216 times:

Quoting Halibut (Reply 9):
Unfortunately EbbUK,
Things will have have to get worse before things get better . However , this should aid in getting rid of the bad apples ! Namely Noel Forgeard !

Airbus, Parent Blame Each Other Over A380 Delays (by Leelaw Jun 16 2006 in Civil Aviation)

Halibut

Actually in that thread I have said that perhaps big mama A380 should get up n away in-service before the daggers are drawn. No point throwing the captain out at sea, let the damaged ship limp back to port then toss the b**tard out.

Just thinking if Noel goes, how tenable is Leahy's position? I suspect some in Airbus would want rid of his aggressive style (I am a big fan). Also customer CEO's might have lost their trust in him (if they hadn't already).


User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 14, posted (8 years 1 month 1 week 1 day 16 hours ago) and read 2192 times:

Quoting Halibut (Reply 12):
EADS is imploding as we speak!

Do you really need to exaggerate things beyond reasoning?
You make it sound as if creditors are knocking on the door to collect the furniture!
The current share price of EADS is up 1% today and the share value is at roughly the same level than it was just over a year ago.... They are no better or worse off then they were then really...

As "aviation experts" some have been commenting numerous times on the low quality of news reports and press articles written by journalists who don't know what they are talking about; I must say some here are falling victim to the same thing now really.... really amusing to read all this as a professional financial analyst.

[Edited 2006-06-16 17:45:47]

User currently offlineSllevin From United States of America, joined Jan 2002, 3376 posts, RR: 6
Reply 15, posted (8 years 1 month 1 week 1 day 11 hours ago) and read 2054 times:

Quoting Zvezda (Reply 11):
That's the board's fault. Incentive options for executives should require that the actual shares be held for at least a year after they are exercised.

No, they shouldn't. If you want to make things more 'long range' then extend the option vesting, but you can't -- and shouldn't -- tell people to do with their money once they've earned it.

However, executives always need to be incredibly cautious about insider trading. Most executives utilize a pre-filed plan for option exercise that happens automatically as so to remove them from things like this.

The timing of all this is tragic -- I find it hard to believe that at any time this year these executives were unaware of a potential upcoming crisis.

Steve


User currently offlineOzGlobal From France, joined Nov 2004, 2711 posts, RR: 4
Reply 16, posted (8 years 1 month 1 week 1 day 10 hours ago) and read 2022 times:

Quoting Slz396 (Reply 14):
Quoting Halibut (Reply 12):
EADS is imploding as we speak!

Do you really need to exaggerate things beyond reasoning?
You make it sound as if creditors are knocking on the door to collect the furniture!
The current share price of EADS is up 1% today and the share value is at roughly the same level than it was just over a year ago.... They are no better or worse off then they were then really...

Don't bother arguing. Just look at the username. This is someone who fantasizes about the demise of Airbus daily if you just look at his history of threads.



When all's said and done, there'll be more said than done.
User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 17, posted (8 years 1 month 1 week 17 hours ago) and read 1895 times:

Quoting Slz396 (Reply 14):
As "aviation experts" some have been commenting numerous times on the low quality of news reports and press articles written by journalists who don't know what they are talking about; I must say some here are falling victim to the same thing now really.... really amusing to read all this as a professional financial analyst.

I disagree Slz396,

Numberous A380 delays

Airbus keeping customers in the dark with the 1st A380 delay .

No Twin aisle , mid size market .

The A350 fiasco & order commitment scandal !

The Forgeard insider trading scandal !

I see it as the journalists reporting on Airbus/EADS's LOW quality past decisions which have lead to there current dilemma . Should they not be permitted to report on the obvious ? And furthermore , can you please provide links to the low quality articles you claim exist ?

Quoting OzGlobal (Reply 16):
Don't bother arguing. Just look at the username. This is someone who fantasizes about the demise of Airbus daily if you just look at his history of threads.

No ,
That's not true !
However , I do feel that the best thing for Airbus/EADS to do is give Forgeard the boot ! He has only amplified Airbus's current problems with is big mouth !  footinmouth 

Halibut


User currently offlineHalibut From , joined Dec 1969, posts, RR:
Reply 18, posted (8 years 1 month 1 week 17 hours ago) and read 1873 times:

Quoting Slz396 (Reply 14):
The current share price of EADS is up 1% today and the share value is at roughly the same level than it was just over a year ago.... They are no better or worse off then they were then really...

What you neglect to mention is , in that time Boeing's shares have nearly doubled & as of recently beat there old , all time high ! Airbus's 1% gain is insignificant to Boeing's consistants gains . They'll need a lot more than that !

http://eastbay.bizjournals.com/wichita/stories/2006/04/10/daily6.html

Quoting Wichita Business Journal:


Boeing stock hits all-time high on China optimism
Wichita Business Journal - April 10, 2006by Ken Vandruff

Optimism about a pending deal with Chinese airlines sent The Boeing Co.'s stock soaring to a record high during trading Monday.

Boeing (NYSE: BA) stock closed at $80.66, up $1.09 for the day, after reaching the all-time high of $80.92 at one point. It closed the day Tuesday down 9 cents to $80.57.


http://ir.shareholder.com/ba/stock.cfm

Quoting The Boeing Company:


Stock Performance
The Boeing Company
As of 4:10 PM ET on June 16, 2006

Last Prev. Close Day Range EPS Last Dividend Shares Outstanding
85.54 84.81 84.75 - 85.85 3.41 $0.30 760,550,000
Change % Change 52 Week Range Volume P/E Yield Market Cap
+ 0.73 +0.86% 59.70 - 89.58 5,970,300 25.11 1.44 68,396,010,000



Halibut


User currently offlineTrex8 From United States of America, joined Nov 2002, 4682 posts, RR: 14
Reply 19, posted (8 years 1 month 1 week 14 hours ago) and read 1807 times:
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Quoting Halibut (Reply 18):
What you neglect to mention is , in that time Boeing's shares have nearly doubled & as of recently beat there old , all time high !

it has doubled alright, also was down from the 60s to 30s because of the production ramp up debacle in 96/7! now we have 2 OEMs who are clueless about how to build planes profitably for their shareholders. Airbus welcome to the club!


User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 20, posted (8 years 1 month 1 week 12 hours ago) and read 1765 times:

Quoting Halibut (Reply 17):
I disagree, Slz396

With what if I may ask? With the fact your remarkable comment

Quoting Halibut (Reply 12):
EADS is imploding as we speak!

is grossly exaggerated?

You are entitled to your opinion, but currently EADS shows no signs of an implosion at all, see my reply #14..

Quoting Halibut (Reply 17):
Can you please provide links to the low quality articles you claim exist?

Low quality ARTICLES?

I was talking about the low quality ANALYSIS which I am reading here (like your 'implosion comment').

Just like popular journalists often refer to and/or interpret technical issues in aviation incorrectly (for which they are then mocked by the 'specialists' here on this site), I made the observation some of these mocking 'specialists of aviation' are falling victim of the same amateurism when venturing outside of their domain of longterm interest/knowledge....

Quoting Halibut (Reply 18):
What you neglect to mention is, in that time Boeing's shares have nearly doubled & as of recently beat there old, all time high.

No neglect from my side was intended, I was just pointing out EADS shares are not sliding any further, like would be the case if they were facing a real implosion.... BTW, I know it has become a habit of yours over the months and years, but there really is no need to compare to B all the time you know, just like there is no need to mention Embraer, Bombarier etc....

EADS shares are back down to the level they were mid first half 2005....
Is that a good thing? Obviously not.
Is that a dramatic thing? Depends when you've stepped into or out of EADS.(*)
Is it a life threatening thing? No sir.

(*) I've already said it before: if the entire Board and the CEO announce they will sell their shares and options from several years all at once, it is time to step out too....

On the other hand, now that the correction has taken place, allow me to give you a trading tip for some good short term profit: Now might be the perfect time to buy into EADS. Although the share has become more volatile, there is a good chance you'l get better percentage gains on EADS than on Boeing over the coming weeks...


User currently offlineLumberton From United States of America, joined Jul 2005, 4708 posts, RR: 20
Reply 21, posted (8 years 1 month 1 week 12 hours ago) and read 1745 times:

Quoting Slz396 (Reply 8):
Enron was pure FRAUD, the share value NEVER reflected to companies real value.

We know that Enron was fraud as a result of the investigations, prosecutions, and lawsuits. The scandals at EADS are just breaking. If there are criminal charges, or even civil suits, then there will be plenty of "discovery" actions coming down the pike. Who knows what these will uncover?

Quoting Wingman (Reply 10):
Yes, but you have very senior managers and their family selling shares within a narrow window of time of this news breaking.

I agree that at least there is the appearance of impropriety, but I suspect that the coming investigations and discovery actions will get to the bottom of all this.

Quoting EbbUK (Reply 13):
Just thinking if Noel goes, how tenable is Leahy's position?

That is a very interesting question. I can't see someone like Forgeard going down alone for the A380 delays....

Another issue here is that if BAE's stake suffers a large loss as a result of the EADS share slide, then BAE will most likely sue as well.

One thing for sure, the bad news for Airbus isn't likely to end soon.



"When all is said and done, more will be said than done".
User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Reply 22, posted (8 years 1 month 1 week 11 hours ago) and read 1723 times:

Quoting Lumberton (Reply 21):
We know that Enron was fraud as a result of the investigations, prosecutions, and lawsuits. The scandals at EADS are just breaking. If there are criminal charges, or even civil suits, then there will be plenty of "discovery" actions coming down the pike. Who knows what these will uncover?

You are taking many steps at a time now as if you almost have a religious believe there will be something big found. To draw the parallel to the daily world we all know: you sound like GWB on the certainty of WMD in Iraq and we all know how that believe ended, don't we?

However amusing all the personal drama may be to look at for some, it is noteworthy to remember that the drop in value of EADS shares is based not on the fact there are 'scandals' like you call them, but on a self-issued profit warning of the company for the years 2007 and beyond, triggered by a delay in A380 production and its repercussions on the operational revenue of EADS which was issued rather casually I must say, as if it almost served EADS well (which it does in a way: see the BAe Systems/EADS negotiations and the British reaction).

In other words, the share price dropped because EADS itself basically said the entire company is worth less than was previously believed and not because some managers might or might not have been doing some unethical and/or illegal things....

Whether or not the personal accusations towards some managers, made by some embittered stake holders in the heat of the disappointment over a big financial loss, will stand remains to be seen, but even then I fail to see how this could change the value of EADS (and even more so Airbus) to the point of predicting an implosion like some here do!

Did Boeing went bust because its CEO messed around with some junior staff member? Is the value of a company linked to the person of its CEO beyond the initial breaking news effect? Or is it linked to the present and future industrial performance? I'd go for the second option and focus on that to predict whether or not a company is at risk.... The rest might not be good PR and could have some unpleasant influence, but nothing really vital.

So to answer your question:
I don't know what will or will not be uncovered, but independent of that, I fail to see the parallel with ENRON.... Unless you believe the corporate results of EADS itself are falsified, but then I'd like to hear your explanation just why EADS itself would start the game, not to mention them making public basically all their financial documents on line?!


User currently offlineGreaser From Bahamas, joined Jan 2004, 1101 posts, RR: 4
Reply 23, posted (8 years 1 month 1 week 11 hours ago) and read 1710 times:

there's more bitching here than there is on The View.
     
Enough with all these unecessary specualations that spell the 'end of airbus', or this bull- "A-3-Folly".

[Edited 2006-06-17 22:13:01]


Now you're really flying
User currently offlineWidebody From Ireland, joined Aug 2000, 1152 posts, RR: 8
Reply 24, posted (8 years 1 month 1 week 11 hours ago) and read 1710 times:

Quoting Lumberton (Reply 21):
Quoting EbbUK (Reply 13):
Just thinking if Noel goes, how tenable is Leahy's position?

That is a very interesting question. I can't see someone like Forgeard going down alone for the A380 delays....

Why would a salesman 'go down' for a production related issue? Don't forget Humbert's previous position puts him heavily in the firing line.


25 Leelaw : Ah, brilliant...we must first destroy shareholder value in order to ultimately enhance it.
26 Post contains images Lumberton : I have no idea whether or not anything will be "found". All that I was saying in my post is that it seems the s***storm for EADS has just started. An
27 Post contains images Slz396 : I can assure you it is not directed against you personally, but for once aviation and finance meat on this site in a widely popular discussion, so I'
28 Lumberton : No problem and I very much appreciate your clarification.
29 Zvezda : The reason why GWB was certain of WMDs in Iraq is that he retained the sales invoice. There is no parallel in the alleged insider trading by EADS exe
30 Post contains links Halibut : Ah Slz396, It's a combination of factors that have lead Airbus/EADS to there current dire situation . This aledged insider trading scandal is a resul
31 DAYflyer : Airbus is in full blown crises mode by now. A-380 not selling as well as projected; hindered by delays. Airbus blames IFE A-350 in trouble after 4 abo
32 Sllevin : Airbus is not in crisis mode. There is no reason that the company won't survive, regardless of delayed, deferred, or cancelled orders on the A380. HOW
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