It’s not unusual for rich executives to pledge shares in their companies to cover loans as they decide the shares are worth keeping or they need them for other purposes, like keeping control.
Today it emerged that WPP CEO Sir Martin Sorrell had charged £55.5m of WPP shares to HSBC in return for that bank taking over loans previously with Allied Irish Bank.
That Sorrell should seek to move loans out of AIB isn’t surprising either as it, like other Irish banks, is finding it hard to access capital as the Irish economy suffers Greece-style woes.
Nonetheless £55.5m, roughly half Sorrell’s stake in WPP (which he doesn’t control of course) is a hell of a lot of money. Sorrell divorced a few years ago and purchased a posh new pad in Knightsbridge but that’s hardly likely to amount to £55m worth.
He may also have borrowed to boost his stake in WPP of course.
WPP declined to comment today but may have to soon as the news of the share pledge, which directors need to disclose, sent eyebrows shooting upwards in the City.
David Ross, one of the founders of Carphone Warehouse, had to resign his post recently when it emerged that he had used 136m shares in the company against personal loans. Ross had lost heavily in the property market.