question..is hedging the same as margin loans

After reading the article...I ask Is Hedging the same as
the reported undisclosed directors margin loans? OR is it more like a short position?...
"other financial instruments to hedge their stocks"?
Does that include margin loans?

Price charts show when Directors sell/buy shares but they dont show this hedging or margin loans or then the possible lending out of those shares to be shorted?


"Executive hedging: insurance or infidelity?
MIRIAM STEFFENS
September 26, 2009 .

HOW far should executives go to marry their own interests with those of shareholders? It's the norm to hold stock. Some even bet the farm on the company by tying up their wealth in it.

But what about hedging yourself against your own performance and the sharemarket if it all goes wrong?

Just like the average punter who buys a house and puts all his money into that house, surely you should be allowed to take out some insurance for your options and shares?

Some shareholder activists beg to differ.

''If it's your job to improve the house's value and you go about making sure that you can't lose if you don't do the job, it's a completely different story,'' says Stuart Wilson, chief executive of the Australian Shareholders Association. ''It is essentially betting against your own company.''

Top executives' use of options deals and other financial instruments to hedge their stocks and share-based incentives against economic losses first came into the spotlight three years ago.

A report by an influential investment funds body, the Australian Council of Super Investors, found many of the top 200 companies left their shareholders in the dark about their executives' handling of performance pay.

A BusinessDay survey of the top 50 companies on the ASX shows that since then, boards seem to have largely woken up to the fact and introduced share-hedging policies, almost all of which include a blanket ban on securing unvested long-term incentives.

''There has definitely been a shift about it,'' said Phil Spathis, manager of strategy and engagement with the Australian Council of Super Investors. ''It is probably fair to say that it is generally accepted as a policy that there is a prohibition of hedging of unvested incentives.''

Over the past three years, the Australian Securities Exchange has revised its Corporate Governance Principles and Recommendations, advising companies to ban the hedging of equity entitlements that have yet to be earned.

Yet apart from the rules requiring disclosure of directors' dealings, laws to restrict hedging deals have never been introduced, and there is a black hole for key executives that aren't on the board, shareholder activists say.

''For a large number of companies it's really unclear, it's murky, as to what's going on with these sorts of financial arrangements,'' said Ian Ramsay, director of the Centre for Corporate Law and Securities Regulation at the University of Melbourne. ''There is absolute legitimate shareholder concern about some of those arrangements.''

Of the 39 companies agreeing to take part in BusinessDay's ASX 50 survey, all said they had some form of restrictions on the hedging of long-term incentives, with only one of them - James Packer's Crown - not banning transactions with unvested equity outright.

Crown requires written company approval before such trades, which a spokesman insists ''would never be given''.

Ironically, even Macquarie - believed to be the market leader in offering those transactions - doesn't allow its executives to use derivatives to limit economic risks of unvested equity.

Just like the companies themselves, pay experts and activists have conflicting views on how companies should handle incentives that have cleared time and performance hurdles to vest.

Yet most agree that transparency should improve, with executives made to report collaring and hedging deals.

''The key issue is about disclosure, and then let the market decide,'' said Erik Mather, managing director of governance research group Regnan.

John Shields, an associate professor in the University of Sydney's faculty of economics and business, concurs. ''With all such dealings, I would have thought that both the market and shareholders are entitled to know what's going on,'' he said.

''If an executive hedges their bets, that suggests to me that they anticipate that there might be market developments that might not be as favourable as ordinary shareholders might be expecting.''



http://www.smh.com.au/business/executive-hedging-insurance-or-infidelity-20090925-g6eq.html