Phillip Schoonover's performance as Circuit City Stores Inc (NYSE: CC) CEO has not been terrific. Last March he canned 3,400 of the highest paid people in the company -- many of which were top sales people who took their customers to Best Buy (NYSE: BBY). Circuit City's financial performance has faltered and its stock has lost 80% of its value in the last year.
As I posted here, I can't understand why Schoonover continues to occupy his position as CEO. A Circuit City spokesman denies a rumor I received this morning from an anonymous tip via e-mail suggesting that Circuit City's stockholders hounded the board into agreeing -- Schoonover will be out by the end of this month, the tipster alleges. Two e-mails from different addresses, which apparently were fake, contained the rumor. The senders didn't identify themselves. I called the company and the two executives mentioned in the e-mail for comment.
Here's one of the e-mails:
"Just received word today (Wed. Jan. 9) via internal DPS E-mail system that CEO Phil Schoonover will be stepping down effective Thurs. Jan. 31, 2008. Apparently his resignation was called for at a recent board meeting after stockholders hounded the board to find a replacement. The memo also says interim CEO will be George D. (Danny) Clark, Jr. (Executive Vice President, Multi-Channel Sales) until a replacement for Schoonover is found. A press release will most likely follow in the next few days.
Mikael Salovaara, the lead Board Director, was the first to call for Schoonover's resignation. With his background at Goldman Sachs, he most likely isn't buying into Schoonover's transitioning plans."
While neither Clark nor Salovaara returned my request for comment, a company spokesperson left me a message. Here's an excerpt: "It's not our normal policy to comment on rumors. But I can tell you that the one you called to check on is patently untrue. Phillip Schoonover has the full support of our board of directors."
Circuit City denied the rumor then, and yet I certainly think it should be true. As I've said many times, I don't know why the board would continue to support an executive who's overseen an 80% decline in the stock in a year.
As for the anonymous tipster(s) -- perhaps they're investors who hope that such an announcement will boost the company's stock. Or they could be Circuit City insiders who'd like to see Schoonover replaced.
If the rumor is true, the interesting question is whether Clark or anybody can save Circuit City. It sounds like a good job for Mitt Romney -- and he'll need one soon.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
Comfort Zone Investing: Survival of the fittest -- letting some banks fail
Three All-American stocks for portfolio fireworks
Michael Jackson fireworks, the workaholic
Reader Comments (Page 1 of 1)
1-10-2008 @ 2:10PM
peggy said...
Lets hope that no one lets Clark is not the one to take over. I believe he has never worled outside of the company? Why would Circuit city let the person who is running the stores into the ground takeover?
1-11-2008 @ 8:36AM
Jeffrey said...
Just FYI.....The new store in Auburn, NY was closed during and after the holidays for no particular reason. I was home for X-Mas and staff were in the store with nothing to do, but the shelves were full of inventory. Proposed opening was in mid December......who the heck does not make that happen during the busiest time of the year? Was told that their anticipated opening was 12/27.......???? what how about making things happen and open when people are shopping for things during X-Mas
1-14-2008 @ 6:56PM
mark mcknight said...
Some body needs to get a set and flush out all of these people, they have destroyed my once great company
1-22-2008 @ 5:00PM
Scott said...
Danny Clark will not be taking over. He "left" the company last week.
2-06-2008 @ 12:36PM
three said...
I have never felt it important to post until these last comments regarding Danny Clark. What a huge mistake the board made in not promoting Clark to President and CEO. He has all the right "got to haves" for the job and is the only one there who could have led the organization out of this mess! Danny is CEO material-he is a motivator, a developer of people, innovative leader of people, thinks strategically and globally. He knows how it all fits together in order to create a dynamic and cohesive team delivering the right multi-channel customer experience. He worked his way up through the stores and knows the business way better than arrogant McKinsey & Co. consultants. He earned respect the hard way and if given the chance could have led CC back to where it should have been-#1 You can say he had 25 years worth of opportunity, but remember he had a very successful career there and there are times where the choices were NOT his! It is entirely possible that he left because he would refused to carry out any more poor directives from current leadership. I am anxious to see what organization is lucky enough to get Clark on their team. They will be the only ones that win out on this deal.
4-16-2008 @ 11:46AM
Rafael Gonzalez said...
Danny Clark-- What a jerk- I remember him from when I worked at Circuit 1989 to 1994-
He as well as Schoonever fail to understand what
makes outfits like Best Buy great!
IT IS ALL ABUT THE PEOPLE!!! And Circuit has never gotten that- They continue to treat their people terribly- That is why they will continuously fail- Ralphster.- Miami Florida.-