One of the perks of being a high-flying corporate executive is stock options.
A board of directors will award them at prices that can be far lower than market prices in the future.
Then an executive can exercise these options by buying shares at that discounted. Immediately, they can sell them at the much higher market rate.
This helps explain how lululemon athletica executive Celeste Burgoyne recently pocketed millions of dollars.
According to a document filed with the U.S. Securities Commission, Burgoyne spent US$538,776.52 exercising options to buy 10,362 lululemon shares.
They were priced between US$52.39 and $69.30.
This occurred on June 29.
On the same day, Burgoyne disposed of 14,362 lululemon shares for prices in the US$366 and US$367 range.
As a result of these transactions, she ended up with US$4,731,335.90.
(The document did not say what she paid for the 4,000 shares not among the 10,632 purchased by exercising options.)
Today, lululemon shares closed at US$376.17. This means Burgoyne would have made more money had she waited until the middle of this month to sell those shares.
Burgoyne is lululemon's president, Americas and Global Guest Innovation.
Her base salary is US$700,000 in the 2021 fiscal year, according to the company's proxy statement.
Last year, Burgoyne's total compensation was nearly $2.75 million including other forms of compensation.
That's far below the $10.6 million collected last year by lululemon CEO Calvin McDonald.