Broadcom CEO Transfers $50M in Stock to an Exchange Fund. What That Means.

Broadcom CEO Hock Tan owned 1,308,474 shares of common stock valued at $454 million, according to a form filed with the SEC on Sept. 15. (Bloomberg)

Key Points

About This Summary

• Broadcom’s CEO, Hock Tan, moved over $50 million in company stock to an exchange fund, according to SEC filings.
• The transfer, involving 148,514 shares, allows Tan to diversify holdings without immediate capital-gains tax implications.
• Following the transfer, Tan holds 482,836 shares directly and 825,638 indirectly, valued at $454 million.

The chief executive of Broadcom transferred $50 million worth of company stock to an exchange fund last week, a securities filing reveals.

Broadcom CEO Hock Tan transferred 148,514 shares of the semiconductor company, valued at $336.67 apiece, to an exchange fund on Sept. 10, according to a Form 4 filed with the U.S. Securities and Exchange Commission.

Putting stock in an exchange fund allows investors to swap large holdings of a single stock for units in a diversified portfolio. Under U.S. tax law, investors can exchange stock for shares of ownership in these funds without triggering a capital-gains tax.

The form notes that Tan owned the shares in question indirectly through a trust. Broadcom declined to comment on the transaction.

Following the transfer, Tan directly owned 482,836 shares and indirectly owned an additional 825,638. His holdings were valued at a collective $453 million as of Wednesday’s close.

Since the transaction on Sept. 10, shares have gained 3%. Broadcom stock is up 50% this year, driven by the boundless optimism around artificial intelligence and strong earnings.

Shares surged after the company posted fiscal third-quarter earnings and issued solid guidance on Sept. 4, then rose by double digits the following week after Broadcom disclosed that Tan’s stock-based compensation was directly tied to its artificial intelligence revenue.

Tan was awarded 610,251 shares as part of a recent contract extension, according to a Form 8-K filed with the SEC. The award will fully vest if Broadcom reaches $90 billion in revenue from its AI products over any consecutive four-quarter period from fiscal 2028 through 2030.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com