The UK tech chiefs who sold at the top

It's a hard life running a technology company. Your shares are less than 10 per cent of their value a year ago, profit warnings are coming out of your ears, and all the talk is about a looming recession.

It's a hard life running a technology company. Your shares are less than 10 per cent of their value a year ago, profit warnings are coming out of your ears, and all the talk is about a looming recession.

But there are some still smiling. Research conducted for the Independent on Sunday reveals that over 50 directors of techMARK companies received over £1m each from selling their shares last year during the technology hype. Share prices were through the roof, and everyone wanted to buy a piece of the action.

Conducted by Directus, part of Thomson Financial, the research reveals that between January and June of 2000, techMARK bosses sold over £330m worth of shares.

Investors who bought in at the top of the boom must be furious. So must the directors who were locked into their shares. But not, perhaps as furious as the shareholders in US technology companies. Similar research released last week revealed that 50 US bosses who bailed out at the top of the market netted more than $100m apiece.

Those directors who didn't sell out are another sorry bunch. They have lost millions in the past year as their paper profits collapsed along with the share price.

Martha Lane Fox's 6 per cent stake in online travel company Lastminute.com used to be worth £50m. After a year of plummeting shares it is now worth a mere £4.6m. But Ms Lane Fox didn't have much choice about profiting from the high – a lock-in agreement prevented her selling shares until last December.

Those sitting prettier include former Atlantic Telecom chairman Nick Berry, who sold last February to receive £37m. Had he been selling this weekend the sale would have brought in a mere £1.5m, with the share price at a measly 39p. To add insult to injury, the stockbroker Old Mutual Securities last week advised its clients not to buy any more of the stock, at the price of 50p. Pity those who paid more than £10 a share.

London Bridge Software directors also made a killing, as a collective £21m was raised from three directors' share sales between March and June last year. Finance director James Reid was the luckiest, catching the market when the shares were at £67.50, bringing in £13.5m. The price now? £2.20.

Psion directors sold a total of £106m worth of shares when they were priced at £65.50. They are now at £1.14.

Yet there is little bruised investors can do. As long as a company directors do not deal immediately before a company's results come out, or when they have share price-sensitive information, for example from bid talks or trading statements, they are within the law.

"If they stick to the rules, then we are constrained in what we can do," admitted a spokesman from the Financial Services Authority.

Its US counterpart, the Securities & Exchange Commission (SEC), is believed to be concerned at a system that allows directors to rake in such huge profits. But the massive share sales are an indication of the insanity of the stock markets at the time.

In normal conditions, investors would use the dealings as a signal of how well the company is doing. A buy indicates the director thinks the company's shares are likely to rise in price, while a sell means it thinks they will fall.

But in those heady times massive share sales hardly stopped the rising prices. When it was announced that Mr Berry had sold out of Atlantic, the shares only dropped 8p to £9.60. Only 11 days later the shares reached their peak of £11.90.

Barbara Ward, former personnel director at CMG, the IT and wireless consultancy company, is thought to be one of the richest women in Britain. She raked in £6.7m when she sold shares last February.

But at least she deserved it – she had worked at the company since 1965 and only left when she turned 65. You can be sure she'll enjoy her retirement, with a second home in the Caribbean.

CMG chairman Cor Stutterheim, who raised the same amount, can't be accused of being a fat cat. He was one of the most underpaid directors on the stock market during the boom period, compared to company directors in similar companies, with a salary of £381,000 in 2000. Robin Saxby, the chairman and chief executive of chip designer ARM Holdings, was also relatively badly paid. But hold the sympathy – he sold £4.2m worth of shares in February last year.

And no directors in our league table face the fate of Amazon.com's Jeff Bezos. The SEC is investigating his share dealings after he sold $11.5m (£8m) of shares days before a negative report on the company.

Investors are also suing the company for publishing what they claim are misleading statements and want to recover losses they have incurred since last February.

Unfortunately for UK investors, there seems little hope for any compensation from London-listed companies.