WASHINGTON — John W. Snow, President Bush’s nominee for Treasury Secretary, executed a well-timed $4.2 million sale of CSX Corp. (CSX, news) stock this summer, raising cash to repay a loan backed by the railroad where he is chairman and chief executive, Thursday’s Wall Street Journal reported.
According to a spokesman for the company, Mr. Snow had planned the sale since April to help pay down a $13.3 million personal loan from Bank of America Corp., where he was once a director. It is unclear how much of the loan, if any, is still outstanding or whether Mr. Snow — who over the course of more than 20 years has built a 1.5 million- share stake in CSX — made a profit from this summer’s sale based on what he paid for the shares that he sold. It took place Aug. 8, through a Bank of America broker, and comprised 120,000 shares sold at $35.22 each, according to CSX’s regulatory filings.
While CSX officials say the sale was in line with rules governing stock sales by executives, its timing could still raise eyebrows, given that less than a month after the transaction, on Sept. 5, the company’s shares dropped 16%, to $ 29.03, after it announced weak profits due to a sagging coal-transport business.
In 4 p.m. New York Stock Exchange composite trading yesterday, the company’s shares closed at $29.02.
“I guess it’s understandable that people would look and say, `Gee, the sale happened a few weeks before the announcement. What’s going on,'” CSX spokesman Adam Hollingsworth said. “But this was really a pretty straightforward, planned sale, and the timing was just a coincidence.”
If confirmed as Treasury secretary, Mr. Snow has said he will divest his CSX holdings, including the shares that formerly were restricted, which he is now free to sell, if needed.