Caterpillar CEO exercises options 4.5 years early, pockets $26.2M

Caterpillar CEO Joseph Creed disclosed a Tuesday sale of $26.2 million in stock, following an option exercise that came four and a half years ahead of schedule.

He sold 32,401 shares on the New York Stock Exchange on August 28, clearing out his longest-held options tranche, which had a March 2031 expiration date.

Those options carried a $219.76 strike price — meaning Creed exercised them at a level 72% below the current stock price that ordinary investors face.

Creed's proceeds of $26.2 million came in at a weighted average of $808.98 per share, just under the filing's $812.98 valuation for shares surrendered to cover his exercise price or tax bill.

Under a filing code tied to paying an exercise price or tax liability, he disposed of 12,002 shares. Their value closely matched the grant's $9.76 million exercise cost.

Despite the massive payout, Creed's August 28 transaction merely brought his 2021 options grant to zero. Caterpillar's proxy filing also lists another 110,651 option grants from 2022 through 2025, including both vested and unvested compensation.

He also kept ownership of 34,555 shares of stock, along with another 11,839 shares in his 401(k) retirement account.

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Creed sells after post-earnings decline

Creed's sales came a few weeks after Caterpillar's quarterly earnings report.

Weeks before the $26.2 million sale, Creed stated, “This is the first time in company history that we have generated over $20 billion in sales and revenues in a single quarter.”

Investors have not matched his confidence. Caterpillar shares have dropped 16% from their $935 peak on the day those earnings were announced.

Creed's filing did not classify his option exercises and associated stock sales under a predetermined Rule 10b5-1(c) trading plan.

Since 2023, the SEC has required public company insiders to check a box on Form 4 filings for transactions following a predetermined trading plan, along with that plan's adoption date.

Certain pre-2023 grandfathered trading plans are exempt.

Because Creed's checkbox remained blank, investors can speculate more broadly about the discretion he exercised in these sales, rather than immediately dismissing them as unremarkably predetermined.