As reported yesterday on MNB, Supervalu has ousted its president/CEO Craig Herkert, the former Walmart executive hired in 2009 to reshape the company as a low price retailer, and replaced him with the company's chairman, Wayne Sales, who now will hold all three titles.
Sales has been non-executive chairman of the company since 2010 and on the board since 2006.
MarketWatch offers some background on Sales, reporting that he "once had to fight the invasion of Wal-Mart and Home Depot onto his home turf when he ran Canadian Tire, a general merchandise retailer that also sells financial products ... Sales drew praise from stock analysts and the Canadian media for his 2000-2006 reign as CEO at Canadian Tire. Revenue climbed 60% to $8.3 billion, while profit more than doubled to $355 million. Gross margin steadily inched up to 8% from 6.4%. More importantly, Canadian Tire’s stock price tripled (Supervalu shares are down 85% since mid-2009).
"The former college drop out from Lynchburg, Va. is credited with spearheading a big-box format at Canadian Tire when Wal-Mart pushed into country in the mid-1990s.
"According to Canadian news reports, Sales, 62, is known for his gregarious personality. He would wander off during store tours to chat up customers and examine inventory. He’s obsessed with details, too. Apparently he could reel off stats on shelf-widths in particular stores. Sales is an avid fisherman who got his start in the retailing world unloading trucks and stocking shelves at Kmart in his hometown of Lynchburg."
In Minnesota, the Star Tribune reports that the analyst community did not seem surprised by Herkert's ouster, and that it probably was necessary for the company to be able to find a buyer or buyers. There also is the suggestion among analysts that Sales could simply be a place-holder while a more long-term CEO is identified.
Yesterday, however, Supervalu sources told MNB that Sales' "appointment today is a not an interim assignment. He is fully committed to these roles. In fact, he indicated that he is resigning from the Boards of Discovery Air and Georgia Gulf to devote himself to the successful turnaround of Supervalu."
The Supervalu source also told MNB that Herkert recently "was provided long-term stock options with a three-year vesting period. Per our severance plan, these newly granted options will not vest."
That severance plan could be generous. One source with knowledge of Supervalu's executive compensation policies said that Herkert could walk away with more than $2.8 million, plus benefits, for "termination without cause."
Supervalu has not released the terms of the separation agreement because it has not yet been filed and formally executed. Supervalu's Proxy Statement does call for severance payments of "2 times for the CEO and 1.5 times for the other NEOs of annual base salary at time of termination," and "2 times for the CEO and 1.5 times for the other NEOs of the average of the performance results (expressed as a percentage) used to determine the NEOs’ bonus amounts under the annual bonus plan for the preceding three years (or all bonus amounts, if the NEO has been employed fewer than three years), multiplied by the NEO’s current target bonus amount."
Sales has been non-executive chairman of the company since 2010 and on the board since 2006.
MarketWatch offers some background on Sales, reporting that he "once had to fight the invasion of Wal-Mart and Home Depot onto his home turf when he ran Canadian Tire, a general merchandise retailer that also sells financial products ... Sales drew praise from stock analysts and the Canadian media for his 2000-2006 reign as CEO at Canadian Tire. Revenue climbed 60% to $8.3 billion, while profit more than doubled to $355 million. Gross margin steadily inched up to 8% from 6.4%. More importantly, Canadian Tire’s stock price tripled (Supervalu shares are down 85% since mid-2009).
"The former college drop out from Lynchburg, Va. is credited with spearheading a big-box format at Canadian Tire when Wal-Mart pushed into country in the mid-1990s.
"According to Canadian news reports, Sales, 62, is known for his gregarious personality. He would wander off during store tours to chat up customers and examine inventory. He’s obsessed with details, too. Apparently he could reel off stats on shelf-widths in particular stores. Sales is an avid fisherman who got his start in the retailing world unloading trucks and stocking shelves at Kmart in his hometown of Lynchburg."
In Minnesota, the Star Tribune reports that the analyst community did not seem surprised by Herkert's ouster, and that it probably was necessary for the company to be able to find a buyer or buyers. There also is the suggestion among analysts that Sales could simply be a place-holder while a more long-term CEO is identified.
Yesterday, however, Supervalu sources told MNB that Sales' "appointment today is a not an interim assignment. He is fully committed to these roles. In fact, he indicated that he is resigning from the Boards of Discovery Air and Georgia Gulf to devote himself to the successful turnaround of Supervalu."
The Supervalu source also told MNB that Herkert recently "was provided long-term stock options with a three-year vesting period. Per our severance plan, these newly granted options will not vest."
That severance plan could be generous. One source with knowledge of Supervalu's executive compensation policies said that Herkert could walk away with more than $2.8 million, plus benefits, for "termination without cause."
Supervalu has not released the terms of the separation agreement because it has not yet been filed and formally executed. Supervalu's Proxy Statement does call for severance payments of "2 times for the CEO and 1.5 times for the other NEOs of annual base salary at time of termination," and "2 times for the CEO and 1.5 times for the other NEOs of the average of the performance results (expressed as a percentage) used to determine the NEOs’ bonus amounts under the annual bonus plan for the preceding three years (or all bonus amounts, if the NEO has been employed fewer than three years), multiplied by the NEO’s current target bonus amount."
- KC's View:
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I took my shot at Supervalu yesterday morning when MNB did its "special alert" about Herkert's firing. You can check it out here.
Not surprisingly, we also got a lot of email about the executive shift, and you can read a number of them in "Your Views," below.
