The two masterminds of Algoma Steel's three-year-old merger with Legato Merger Corp. are now selling off millions of dollars of their own shares in the Sault steelmaker.
David Sgro was chief executive officer of Legato Merger at the time of the 2021 merger, which tucked $306 million of fresh capital into Algoma's pockets.
Michael McQuade was CEO at Algoma Steel then, working with Sgro to close the $1.7-billion deal.
Both men currently sit as directors on Algoma's board.
Both are considered company insiders and both are subject to regulatory controls on insider trading.
On Sept. 12, McQuade reported selling US$2.05 million worth of Algoma stock at a price of US$10.16 per share.
That diminished McQuade's holding by 67 per cent, which Simplywall.st yesterday said "arguably implies a strong desire to reallocate capital."
"The recent sale by Michael McQuade was the biggest sale of Algoma Steel Group shares made by an insider individual in the last twelve months, according to our records," the web site reported.
"So what is clear is that an insider saw fit to sell at around the current price of US$9.76. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us.
"Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern," Simplywall.st commented.
But McQuade wasn't the only key insider selling stock this month.
Last Wednesday, Sgro reported selling US$682,294 worth of Algoma shares.
Two days earlier, he had served notice to the U.S. Securities and Exchange Commission that he proposed to sell US$2.04 million in company stock.
Company records place the total value of Algoma securities beneficially owned or controlled by Sgro at $8.1 million as of Aug.1 of this year.
Sgro is based in Princeton Junction, New Jersey.
He's a heavy hitter in the Algoma boardroom at 105 West St., chairing the powerful human resources and compensation committee, which considers recommendations from current CEO Michael Garcia about the hiring and firing of senior brass, and how much they should be paid.
His Legato Merger Corp. is a special purpose acquisition company (SPAC), essentially a shell company created to raise money through an initial public offering to buy another company.
SPACs are often referred to as 'blank cheque companies.'
Sgro is a veteran of this trade, having been involved in the management of eight SPACs and served on the board of 14 public companies in the United States and Canada.
There's been published speculation in recent weeks that Algoma might be talking to investors interested in taking over the Sault's steel mill.
Algoma Steel never discusses such matters.
In his notice of proposed sale of shares this month, Sgro made the standard declaration that "he does not know any material adverse information in regard to the current and prospective operations of the Issuer of the securities to be sold which has not been publicly disclosed."
Sgro filed his notice under what's known in the United States as Rule 144.
Also referred to as the 'dribble' rule, Rule 144 is designed to keep insiders from selling large amounts of their shares quickly, preventing them from liquidating all their shares at once.
At Algoma's virtual annual meeting on Tuesday, shareholders will be asked, for the first time ever, to signal their approval or disapproval of millions of dollars in performance incentives paid to senior executives.
Under a new 'Say on Pay' policy, they'll be asked to vote on whether they approve of Algoma's approach to executive compensation.
"This policy is designed to enhance accountability for the board's compensation decisions by giving shareholders a formal opportunity to provide their views on the board's approach to executive compensation through an annual non-binding advisory vote," the company said in an information circular filed with the United States Securities and Exchange Commission.
"This is an advisory vote and the results will not be binding upon the board. However, the board will take the results of the vote into account, as appropriate, when considering future compensation policies, procedures and decisions and in determining whether there is a need to significantly increase their engagement with shareholders on compensation and related matters," the circular stated.
"The company will disclose the results of the shareholder advisory vote as a part of its report on voting results for the meeting."
Michael McQuade is not up for re-election at Tuesday's meeting.