RadioShack's board of directors is throwing its support behind the existing management team led by new acting president/CEO Claire Babrowski.
The action follows last week's resignation of CEO David Edmondson several days after the company initiated an investigation into irregularities regarding his resume.
Babrowski joined RadioShack last year as executive VP/COO from McDonald's, where she was senior executive VP and chief restaurant operations officer. She will retain her COO duties.
“This situation is especially painful because Dave is a talented and dedicated individual who has made many contributions to the company,” said Leonard Roberts, RadioShack executive chairman, in a written statement. “Dave recognized that major distractions for the company could negatively impact its efforts to implement the company's turnaround strategy. Undoubtedly, this was a tough decision.”
The investigation into Edmondson's résumé will cease, Roberts said, adding that the board knew “some, but definitely not all” of the issues raised in the last week.
An executive search team has been appointed to find a successor.
Banc of America Securities retail analyst David Strasser believes the moves “are the first step in the right direction for RadioShack. [Babrowski] was very impressive at [this month's] analyst meeting,” he observed, “and it was evident that she drove much of the changes that are set to take place over the next year. Her reputation at McDonald's was strong and she was a contributor to their turnaround. We believe Claire is the benchmark against which all other CEO candidates will be measured. Additionally, we believe Dave Barnes is a high-quality CFO, and will be quite prudent with shareholder capital.”
Roberts also emphasized the board's support of the new management team and turnaround strategy, announced with the company's fourth quarter earnings results (see story on p. 1). “We have been monitoring the development of the turnaround plan,” said Roberts. “It's an excellent strategy. Claire is the right person at the right time to reposition RadioShack, and we believe this team's professionalism and character will reassure the company's many audiences.”
In a prepared statement, Edmondson said that “the board and I have agreed that it is in the best interest of the company for new leadership to step forward so that our turnaround plan has the best possible chance to succeed, as I know it will.” He added that as CEO he was most proud of the executive team he assembled over the past year. “I have great respect for them and know that they will achieve great success together.”
According to a filing with the Security and Exchange Commission, Edmondson will receive $975,000 in severance pay plus $57,692 in unpaid vacation. In return he has agreed not to sue or disparage RadioShack, divulge confidential information or compete with the company for 18 months.
Edmondson's trouble arose after reports in the Fort Worth Star-Telegram the week of Feb. 13 indicated that he never received the two bachelors degrees claimed on his resume and corporate biography. Edmondson acknowledged the discrepancies in a written statement prior to his resignation. “The contents of my resume and the company's Web site were clearly incorrect,” he said. “I clearly misstated my academic record, and the responsibility for these misstatements is mine alone.”
Edmondson clarified that he had received a three-year theology degree but could not document the diploma.
“I apologize to the board and the employees for the confusion I have created by carrying erroneous information on my resume and mishandling my explanation of it,” he said.
The revelations surfaced two days before RadioShack's annual investor conference, and the release of the company's fourth-quarter earnings results. The board initially indicated its support of the beleaguered executive, but accepted his resignation by week's end.