During the six months ended November 30, 2008, book publisher Scholastic Corp. repurchased approximately 800,000 shares on the open market for $20.1 million (at an average cost of $24.83 per share). Of interest, 100,000 of these shares were bought directly from its Chairman and Chief Executive Officer, Richard Robinson, in a negotiated private transaction, according to its 10Q regulatory filing for quarter-ended November 30, 2008:
- On October 10, 2008, the Company agreed to purchase 100,000 shares of Common Stock from Richard Robinson, Chairman of the Board, President and Chief Executive Officer of the Company, at a price of $20.59 per share, or an aggregate purchase price of $2.1 million, pursuant to the Company’s previously announced stock repurchase program which had been approved by the Board in May 2008. The purchase price was determined with reference to the last transaction price reported on NASDAQ immediately prior to the purchase. The shares became available for sale due to Mr. Robinson, as a result of current market conditions, being required to sell the shares in order to protect the collateral value underlying a personal loan with a bank secured by the shares.
I am not suggesting any hint of impropriety in the stock repurchase from Robinson; nonetheless, the transaction continues a previously discussed pattern of pampering — in fiscal 2008 ended May 31, the company reimbursed Robinson $74,953 for payments made to employees who performed personal services dedicated solely on his behalf.
In December 2008, the publisher of the “Harry Potter” series lowered its fiscal 2009 earnings outlook, citing the ongoing recession. The share price of Scholastic changed hands at $12.00 a share (in afternoon trading) on the NASDAQ on January 14, 2009, which translates to a loss of 42 percent on the shares repurchased from Robinson.
