Last Updated Jun 3, 2009 2:37 PM EDT
UPDATE: Another possible factor in the stock drop was this sale of $600 million in five-year notes. Within a day of the pay package being approved by shareholders, WPP stock slipped from $39.15 to $34.86, a nearly 11 percent drop. That was a decline in market capitalization -- shareholder wealth, if you like -- of roughly $1 billion.
Of course, the pay package news came on the same day as Sorrell revealed that revenues were down 3.9 percent at WPP through April, and more layoffs were on the way.
Conventional wisdom says that would be the driving factor in supressing WPP's stock ... except that we already knew WPP revenues were shrinking -- Sorrell told us himself back in March -- and the layoffs were scheduled on May 4. So both those events should have already been priced in to WPP stock.
The only thing different yesterday? The massive pay rises Sorrell and his executives were taking, and the $600 million debt sale. As BNET noted (via Adweek) earlier, those packages come at a cost. Up to 7.8 percent of profits, in some cases. And piling on debt never helped a company. Either way, Sorrell is being rewarded for placing his company in a worse position than it was a week ago -- through lower stock, higher executive expenses or higher debt. Pick your poison.
Side note: This is a screengrab of Google stock page for WPP earlier today. Check out the top headline.
Hat tip to Tribble.
- See previous coverage of WPP:
- At WPP, Sorrell's $95 Mil. Pay Package Gathers More Foes -- But Passes Anyway
- WPP's Sorrell Wants $95 Million Pay Package; Sparks Protest at "Unnecessarily Complex" Scheme
- WPP Alleges "Secret Payments" Spoiled Deal With George Patterson, Communications Group
- WPP's Sorrell Dusts Off Latest Wacky Recovery Metaphor: "An Italic L, Flipping Up"
- Sorrell Prepares to Leave WPP Amid 7,000 Layoffs
- WPP Q1: Debt Doubles; "It's All Lehman Brothers' Fault"
- WPP Accuses Spot Runner of $54 Million Scam; Was Sorrell Asleep at the Wheel?
- The Enfatico Fiasco: Isn't This All Dell's Fault?
- WPP's Sorrell Calls Publicis' Levy "Callous" in Remarks on Recession
- Sorrell's Interest in Branded Content Is Explained by WPP's Finances
- WPP's Layoffs Plan Explained -- Wall Street Doesn't Believe Sorrell's Rosy View of the Future
- WPP Q4: Lower Profits Increase Likelihood of More Layoffs