The 5 Dumbest Things on Wall Street This Week: May 17
5. Spectrum's Shenanigans
Not to complain too much Dumbest fans, but we can't remember a time when we've worked this hard to fill our less-than august list. This raging rally in stocks is turning every CEO in sight into a genius, making it an almost a Herculean task even for pros like us to separate the brainless from the bull market.
Luckily, however, we can always count on our good friends at Spectrum Pharmaceuticals
Let's start with CEO Raj Shrotriya's paycheck, because that piece of corporate idiocy was the easiest to unearth. As disclosed in the 10-Q Spectrum released last Thursday -- after the bell and the company's conference call mind you -- Shrotriya pocketed $10.1 million dollars in 2012 for his services.
Pretty killer comp, huh, even if it was down from the gobsmacking $25.2 million Raj took home 2011. And what makes it even more impressive is the fact that shares of Spectrum sank 22.5% last year.
Eat your heart out A-Rod. When it comes to getting overpaid for lack of performance, you've been outslugged.
So, what exactly did Raj do to earn all that dough if the stock's performance was that unbelievably sad?
Well, according to the company's compensation committee, Raj earned every penny because he met all the targets laid out for him. For example, under his leadership the company grew revenue 39% from $193 million to $268 million.
In order to meet that goal, however, it's now become abundantly clear that he stuffed the company's colon cancer drug Fusilev down the throats of every single customer he could. Seriously, if there was ever any doubt as to why the company issued a massive warning about Fusilev sales on March 12th -- just three weeks after Shrotriya told analysts that Fusilev sales would grow this year -- well, now we know the truth. Nobody had any room left on their shelves for the stuff!
In case you may have forgotten, Spectrum revealed in March that first quarter revenue fell 35% to $38.7 million compared to last year. Fusilev sales totaled $11.8 million in the first quarter, down sharply from $51 million in the prior year.
We also now know that the SEC is interested in Spectrum's Fusilev shenanigans as well. Tucked into Thursday's SEC filing was a disclosure that the regulator is investigating the "change in ordering patterns of Fusilev" that forced Spectrum to drastically cut its 2013 sales forecast to between $80 million and $90 million.
Not that the analysts on the company's conference call could have possibly inquired about the investigation. Raj cleverly scheduled the call for 1:30 p.m. last Thursday, while the 10Q was released after the closing bell.
Very sneaky, Shrotriya! Very sneaky indeed!
That said, discerning listeners might have been able to pick up that something was amiss because Raj kept avoiding all questions pertaining to Fusilev. Whenever an analyst tried to get Raj to say something about the drug's sales, he redirected the query to one of his trusted advisers. At one point Raj curiously responded to a question about the drug's inventory by stating, "We can't comment on FUSILEV."
Sorry, big guy, now that the Feds are on the case, you're going to have to start talking. And when you do, we'll be right here, hanging on your every word.
What else can we do? There's a bull market going on and we need all the dumb stuff we can find!