Automatic Data Processing Executive Chair Acquires 52,254 Shares After Exercising Company Stock Options

Carlos Rodriguez, Executive Chair at Automatic Data Processing ADP, reported a large exercise of company stock options on September 14, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Thursday showed that Rodriguez, Executive Chair at Automatic Data Processing, a company in the Industrials sector, just exercised stock options worth 52,254 shares of ADP stock with an exercise price of $169.84.

Automatic Data Processing shares are trading down 0.07% at $248.12 at the time of this writing on Friday morning. Since the current price is $248.12, this makes Rodriguez's 52,254 shares worth $12,965,262.

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Why Insider Transactions Are Important

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

In legal terms, an "insider" refers to any shareholder who owns at least 10% of a company. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Important Transaction Codes

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates the insider may have been forced to sell shares in order to receive compensation that had been promised upon being hired by the company.

Check Out The Full List Of Automatic Data Processing's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.