Wow. I have to say that this headline refers to one of the most dramatic procurement-related screwups ever.
Yesterday, Google’s stock plummeted from $754.64 per share at 12:34PM to $687.30 per share at 12:50PM (source: Yahoo! Finance) before trading of the stock was halted.
What was the reason for such a sudden and substantial drop?
According to a statement issued by Google and reported by ABC News, the company’s printing supplier, RR Donnelley, mistakenly filed Google’s quarterly financial report with the Securities & Exchange Commission early and without final authorization from Google.
Sounds like an innocent mistake right? We’ve all had suppliers deliver a little early, deliver a little late, complete something before told to, etc., right?
Sure, but let’s look at the effect of this.
CEO’s are often compensated with stock. When the company does well, its stock price goes up, and the CEO’s net worth increases. This practice is designed to keep compensation aligned with organizational goals.
Like most CEO’s of publicly-held companies, Google’s CEO, Larry Page, owns a crap-ton of company stock. According to Forbes, he owns 80,000 shares.
So, let’s do a little math on how this “little” supplier mistake affected the personal assets of Mr. Page.
The stock declined $67.34 per share in 16 minutes.
Larry Page owns 80,000 shares.
80,000 x $67.34 = $5,387,200
That’s how much net worth Larry Page lost.
In 16 minutes.
Due to a supplier error.
How would you like to be the Google procurement specialist responsible for managing the relationship with RR Donnelley?