For health club owner Bahram Akradi, the stock market's recent fall has meant some very heavy lifting.
In recent days, Akradi, founder and CEO of Life Time Fitness, has sold more than 1.46 million shares, valued at $27.5 million, to meet margin calls.
Akradi had pledged 3.5 million shares of his Life Time shares to secure various margin loans. A margin account allows investors to buy securities with money borrowed from the broker.
With Life Time's shares down 40 percent in the last month, and the broader markets dropping by similar amounts, the unidentified financial institution that made the loans placed the margin call. To meet those obligations, Akradi sold 582,000 shares of his Life Time stock on Thursday. A company spokesman declined to comment Wednesday on when or from whom Akradi obtained the margin loans.
In a press release last Friday, the company said further sales of Akradi's Life Time stock might occur to satisfy minimum margin requirements under the loans. A Form 4 filed on Tuesday with the Securities and Exchange Commission showed Akradi sold another 771,200 shares later on Friday and 110,909 shares on Monday for similar reasons.
Akradi founded Life Time in 1992; the company went public in an initial public offering in 2004 and Akradi has been the company's largest shareholder. The company's most recent proxy statement showed he beneficially owned 4,135,700 shares or 10.6 percent of the company. His recent stock sales likely mean Akradi is no longer the company's largest shareholder, although with about 2.67 million shares he still holds a significant stake.
In March, Akradi requested from his board of directors that he be allowed to forgo his cash compensation for 2008 and instead receive his entire 2008 compensation in the form of restricted stock to show his confidence in the value of Life Time. A company spokesman said Akradi remains committed to the restricted-stock compensation plan. In 2007 he had an annual salary of $926,667.
Akradi is not the only CEO to get a margin call in recents days. Last week, Terry Considine, chairman and CEO of the Denver-based real estate firm Apartment Investment & Management Co. was required to sell 989,600 shares or $22.3 million to meet margin calls.
On Monday, Tesoro Corp., an oil refiner based in San Antonio, Texas, said that its chairman, president and CEO, Bruce Smith, had been forced to sell 251,100 shares, approximately $2.2 million, to meet a margin call from Goldman Sachs Group.
Last week another energy company, Oklahoma City-based Chesapeake Energy Corp., said its co-founder and CEO Aubrey McClendon had to sell most of his 4.6 million shares, or $107.5 million, to meet a margin call.
Patrick Kennedy • 612-673-7926
