Think things are bad for your business? At least you’re not James Mooney, chairman and CEO of OM Group.
In January, things looked good for Mooney and his company. It’s stock price sat above $60 per share and cobalt sales appeared strong. By May, the stock neared $70 per share and OMG directors were telling shareholders the future was bright.
It didn’t take long for the optimism to fade.
By September, OMG’s stock had begun to slide toward $40 per share. Then in October, the walls caved in.
On Friday, Oct. 18, OMG’s share price closed at $32.25. Company officials claimed they knew of no reason for the sudden drop. The following Monday, the slide continued.
Then it got even worse. On Tuesday, Oct. 29, CEO Mooney’s brokerage firm sold 710,000 shares of OMG stock to meet a margin call. Mooney had pledged the shares, which accounted for more than 90 percent of his net investment in the company, as collateral. As the value of OMG stock fell that day, it decreased the amount of equity in Mooney’s account to less than the minimum requirement for a margin account.
To add insult to injury, the sell-off occurred the same day that OMG announced a major restructuring, which drove the stock price down more than 70 percent to near $7 per share. Accordingly, Mooney’s stock sales were questioned, and the company faces several shareholder class-action lawsuits.
And here you thought your corporate problems were a headache.