U.S. Transportation Secretary Elaine Chao has sold her stock holdings in leading aggregates company Vulcan Materials Co., after published reports said Chao—a former Vulcan board member—had owned stock in the company for more than a year after the date when she had said she would divest it.
In a June 12 letter to a senior ethics officer at the Dept. of Transportation, Chao said she had divested her deferred stock holding in Vulcan as well as in diversified manufacturer Ingersoll-Rand PLC on June 3.
Chao was a director of Vulcan and Ingersoll-Rand from 2015 until resigning on January 31, 2017, when the Senate confirmed her as the DOT Secretary. Her compensation from the companies for her time on their boards included deferred stock units.
In her letter, Chao said that she had sold her Vulcan and Ingersoll-Rand holdings “even though you advised me that holding these stocks did not create a conflict of interest.”
Chao also said that she had changed her 2018 financial disclosure report to correct an “inadvertent misstatement” on earlier reports. Those earlier filings indicated that her deferred compensations from the companies were “cash payouts,” when they actually were in the form of stock.
A Wall Street Journal story published on May 28, followed by stories by other news outlets, focused on Chao’s holding in Vulcan, the leading U.S. aggregates producer. Highway construction is an important market for the Birmingham, Ala.-based company.
A DOT spokesperson had said in statement sent to ENR on May 31 that Chao had disqualified herself from any DOT action that would have “a direct and predictable impact” on Vulcan.
DOT distributes more than $40 billion per year in federal-aid highway funds to the states. But the states advertise and award construction contracts that draw on the lion’s share of those funds.
Regarding Chao's divestment, the DOT spokesperson said in a statement sent to ENR on June 14 that “although not required to, the secretary has sold these stocks and as a result she has no financial interest in the companies.” The spokesperson added, “The secretary’s decision to divest entirely demonstrates her commitment to going above and beyond what is required in terms of compliance.”
According to a draft letter from the senior DOT ethics official to the federal Office of Government Ethics, Chao retains a financial interest in Wells Fargo & Co. Chao is a former director of Wells Fargo.
Ingersoll-Rand’s products include heating and air conditioning systems, power tools, compressed air and gas systems and materials-handling systems.