Wayne Sales To Collect King’s Ransom; New CEO Sam Duncan Already Engaged
It’s good to be Wayne Sales, newly departed chief executive of Supervalu. Wayne couldn’t even wait around to see his final act completed. Then again, why bother to stay at the company that is going to richly reward you ($12.8 million) for seven months of tortuous work engaging your friends at Goldman Sachs and Dunhill & Co. to unload a company that you watched unravel from your director’s seat and (since 2010) as non-executive chairman of the board?
No point in hanging in for another six weeks until the transaction is completed. Wayne, give yourself a pat on the back and a few more vanity mirrors for engineering such a coup. Besides the horrific sales, earnings and morale issues that have stunk up the joint in Eden Prairie and at its operating divisions and distribution centers, weren’t you one of the biggest proponents of hiring Craig Herkert to become CEO in 2009? Where were you and your fellow board members during the entirety of Herkert’s tenure, in which earnings and overall sales declined and ID revenue dropped every single quarter for the 38 months “The Spinmeister” was at the helm? How misguided was your stewardship during that period? How about fiduciary responsibility to the shareholders?
However, when the pressure became so great that Herkert had to be relieved of his duties, who better than a former tire salesman (please note that I didn’t say “used tire” salesman) to lead the charge? After all, it appeared that not many people would be qualified to lead a company in such disarray. And, even if someone could be found, would he or she want to move toMinneapolisand, then, how much would you have to overpay him to accept the job, especially since Herkert would have to be paid a large severance because of a new contract he signed that you approved?
Yes, it must have been obvious by your own deduction skills that you, Wayne “The Commission-er” Sales, were the right man for the job. By that point, last July, the only remedy was to dump the company and hopefully gain some value for Supervalu’s shareholders who had been brutally punished during your entire tenure as director.
It was pretty smart of you to negotiate a generous contract even as you continued to lay off people and freeze bonuses and other compensation for the loyal worker bees who already had suffered greatly over the past six years.
However, your real coup wasn’t fully uncloaked until the SEC mandated the filing of a 14D-9 tender offer filing which revealed your richly deserved severance. What a plan: move from chairman to CEO of a company that you helped damage, collect a king’s ransom for seven months of liaison work and then leave before the final whistle blows.
Brilliant, man, brilliant!
By the way, “The Commission-er’s” package breaks down to $8.1 million in cash and $4.7 million in equity. Also gaining lucrative exit packages were CFO Sherry Smith ($3.51 million); Janel Haugarth, president of SVU’s independent business ($3.65 million); and Andy Herring, EVP-real estate, market development and legal ($2.82 million). Those payments will be made when those executives are terminated from their positions within two years of the acquisition closing. All three executives also received retention bonuses after the company was put on the sales block last July.
On the other hand, I can’t praise the efforts of new CEO Sam Duncan enough. In the slightly more than three weeks since it was announced he would become chief executive of Supervalu and in the subsequent two weeks since he was officially installed, more than a dozen retailers (both from the independent ranks and from the regional chains that Duncan leads) have contacted me to praise Duncan’s willingness to meet with them, openly discuss problems and seek solutions.
Essentially, in fewer than 40 days, Sam Duncan has accomplished more than Craig Herkert did in more than three years on the throne.
Especially noteworthy were the positive comments of several independent retailers who met and chatted with Duncan and incoming Supervalu chairman Bob Miller at SVU’s cocktail party at the recent National Grocer’s Association (NGA) convention held in Las Vegas earlier this month.
This should come as no surprise to anybody who’s tracked Miller and Duncan’s careers. They are both operators who don’t tolerate a lot of process or BS. Their records indicate that sales come first and they’ve proven they can adapt to change quickly. That in itself will be a very refreshing change to the many divisional Supervalu associates who have been watching the “rope-a-dope” act of Herkert since 2009 and the inertia that existed from the Jeff Noddle regime three years before that.
Miller alone has a legacy that’s Hall of Fame worthy, dating from his leadership positions at the original Albertsons in the 1960s to Fred Meyer, Kroger, Rite Aid, Wild Oats and most recently as CEO of Albertson LLC (nowCerberusAB). He’s mentored so many people in the industry his genealogy tree would be a tall one. Here’s a sampling of Miller’s “branches.” He not only mentored Sam Duncan, he tutored current EVP-operations of Albertsons LLC Bob Butler, who may be in line to become CEO of the newly expanded grocery firm. Other Miller connections include John Standley, a Fred Meyer alum, who is now CEO of Rite Aid (where Miller once served as chairman) and who was chief executive of Pathmark under the stewardship of Ron Burkle. Additionally, veteran industry executives Jim Donald (ex-CEO of both Pathmark and Starbucks, who now is chief executive at Extended Stay Hotels) and Ron Dennis (retired president of SVU owned-Farm Fresh) both worked for Bob Miller in the 1970s. And there are at least another half-dozen retail executives who have a link to Miller.
It appears that March 18 will be the dawning of a new era for Supervalu. There will be a lot of difficult and painful decisions to be made based on the carnage that Miller, Duncan and their team will inherit.
However, I’m fairly certain that better days are coming for what was once one of the grocery industry’s most admired companies.