Discovery founder Adrian Gore and top executives sell $7 million in shares

Nine senior executives at Discovery, the South African financial services group, including founder and Chief Executive Officer Adrian Gore, sold shares worth R117.9 million, or about $7.1 million, after long-term incentive awards vested at the end of September.

Discovery disclosed the sales in a stock exchange announcement. The shares vested on Sept. 30 under the company's Long-Term Incentive Plan and its BEE Employee Share Trust, IOL reported.

The executives sold a combined 450,224 shares between Sept. 23 and Sept. 30 at a weighted average price of R261.939 each, about $15.72.

When the awards vested, participants could keep all their shares and pay the tax bill themselves, sell just enough shares to cover the tax, or sell their vested shares outright.

Kallner's sale was the biggest

Hylton Kallner, chief executive of Discovery Bank, made the largest sale. He sold 182,508 shares worth R47.8 million, or about $2.9 million.

Gore sold 75,084 shares worth R19.7 million, about $1.2 million. Kenny Rabson, chief executive of Discovery Invest, sold 63,962 shares worth R16.8 million, about $1 million, and Riaan van Reenen, chief executive of Discovery Life, sold 52,226 shares worth R13.7 million, about $822,000.

Discovery's announcement listed those four transactions simply as share sales. It did not say they were made to cover tax, and it gave no other reason for them. Together they came to about R97.9 million, or roughly $5.9 million.

Five sold only to pay tax

The other five executives sold shares specifically to cover the tax owed when their awards vested.

Barry Swartzberg, who co-founded Discovery with Gore in 1992, sold 25,590 shares worth R6.7 million, about $402,000. Chief Financial Officer Deon Viljoen sold 26,020 shares worth R6.8 million, about $408,000.

Nonkululeko Pitje, chief executive of Discovery Corporate and Employee Benefits, sold 13,177 shares worth R3.45 million, about $207,000. Executive Stuart Cohen sold 8,594 shares worth R2.25 million, about $135,000, and Ayanda Ceba sold 3,063 shares worth just over R802,000, about $48,000.

The tax-related sales totaled about R20 million, or $1.2 million.

All of the shares came from awards granted to the executives in previous years. None of them were new awards.

Trust buys R535 million of stock

In a separate transaction, Discovery's LTIP Trust bought 2,045,458 shares, worth R535.5 million or about $32.1 million, from employees in the plan who chose to sell their vested shares. The off-market deal was carried out to set the trust's net share position for its future obligations under the incentive plan.

The trust's purchase means most of the shares sold by plan participants did not go onto the open market.

Executive share sales after vesting are routine at large listed companies, and they are often driven by tax bills or personal financial planning rather than by a view on the company's prospects. They are closely watched by investors, however, because the timing and size of sales by senior managers can signal how insiders view their own stock.

The disclosure came in the same week that Discovery Health Medical Scheme was among South African medical aids announcing 2027 contribution increases close to double the 3.8% guideline set by the Council for Medical Schemes, according to IOL.

Gore and Swartzberg founded Discovery as a health insurer in 1992 and built it into one of South Africa's largest financial services groups. It now runs businesses in health insurance, life insurance, investments, banking and short-term insurance, and it exports its Vitality behavioral insurance model to insurers around the world.