WMG Shares Dip After Cohen Sale
Shares in Warner Music Group Corp. slid 9.3 percent Wednesday after a filing showed top music executive Lyor Cohen sold 800,000 shares, more than a fifth of his stake in the company, earlier in the week.
Cohen, the 47-year-old chairman and chief executive of recorded music in North America, sold the shares for $8.45, or $6.76 million, on Monday. On Wednesday, shares fell 75 cents to $7.29 on Wednesday.
The sale came after a report in the New York Post in June that said Cohen was buying a $6.8 million home in the Hamptons. He still holds 2.62 million shares.
Pali Research analyst Rich Greenfield criticized the sale and the executive’s compensation in a Web posting on Wednesday.
"Senior management continues to carry on as if the music industry was in its heyday," Greenfield wrote. "This simply cannot help morale at WMG."
Company spokesman Will Tanous said the stock sale was for personal reasons, including Cohen’s divorce from his wife Amy, which was finalized recently. The couple have three children.
"My confidence in Warner Music Group (nyse: WMG – news – people )’s future prospects remains as strong as ever," Cohen said a statement. "This sale reflects nothing more than a normal need for liquid assets for personal expenses as well as my financial adviser’s recommendation that I diversify my portfolio for tax and estate planning."
Cohen, who received $4.4 million in compensation in fiscal 2007, said a significant portion of his compensation remains dependent on the performance of Warner Music’s stock.
Warner Music Group said last week it narrowed losses to $9 million in its third quarter as revenue rose 5.5 percent to $848 million, helped by a weak dollar, overseas growth and digital sales.
The music industry has been hurt by falling CD sales, and the growth in digital downloads has not yet made up the difference.
Shares at the No. 3 music company in the United States are still up more than 50 percent since closing at a recent low of $4.77 in late March.