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CEOs of GameStop (GME), BlackBerry (BB), Koss Corporation (KOSS), AMC Entertainment (AMC) and others who have seen their fundamentally besieged businesses plunged into the recent commercial madness of the past few weeks appear to have taken a lesson from leadership of Don Corleone.
It’s about never letting anyone outside of your family know what you’re thinking. Because for the most part, the supposed public faces of these founding entities have been anything but public in their responses during the Reddit-fueled business boom. In fact, they were blatantly missing in action, at least in the eyes of John Q. Public.
“I’m stunned. You know I’m sure they issued a gag order to the employees, but I’m stunned the CEOs didn’t say anything,” said David Callaway, former CEO of then-listed financial media. stock Exchange. TheStreet outfit. Callaway, now founder of climate finance newsletter Callaway Climate Insights, thinks all of these CEOs should at the very least say publicly that it’s business as usual in the midst of the madness.
“People want to know what’s going on, and there are a lot of implications for these actions for everyone. So obviously they’re going to wait until it calms down, but I’m amazed that they don’t. not be more proactive, ”Callaway added.
What happened is certainly nothing that GameStop CEO George Sherman, BlackBerry CEO John Chen and Koss Corporation CEO Michael Koss have seen in their management careers.
Shares of GameStop (which has become the face of the mania) hit a daily intraday high of $ 483 on January 28 as retail traders on Reddit rallied to force institutional investors to bypass the stock. At that price, Sherman, CEO of GameStop, saw his stakes in the company valued at $ 1.1 billion on paper. Sherman joined GameStop in 2019 with an annual base salary of $ 1.1 million, according to documents from the United States Securities and Exchange Commission (SEC).
Shares of the video game retailer have since collapsed on Earth, trading at around $ 64 Monday morning as traders on Reddit scouted for their next target. Still, not a public glance from Sherman at anything that is going on with the stock. He didn’t even comment in a Feb. 3 press release announcing a new chief technology officer who will oversee the company’s e-commerce activities. Typically, this level of recruiting would get a comment from the CEO in the press release.
The last time Sherman was heard publicly was in a January 28 press release detailing GameStop’s human rights initiatives. Sherman last acknowledged the business trends in a Jan. 11 press release revealing holiday sales performance – this happened before the stock price exploded.
GameStop declined to make Sherman available for an interview for this story. Shocker.
Mum has been the word for BlackBerry and its longtime CEO John Chen, though its stock at one point in January rose 317% for the year. But unlike GameStop, BlackBerry has at least recognized what’s going on in the real world.
“The Company is not aware of any material and undisclosed corporate development and has no material change in its activities or business that has not been publicly disclosed which would explain the recent increase in market price or trading volume. of its common stock, ”BlackBerry said in a Jan. 25 statement.
Chen did not give a quote in this press release. BlackBerry did not respond to Yahoo Finance’s request to make Chen available for an interview for this story. The stock has lost over 200% since hitting an intraday high of $ 28.70. January 28.
On January 29, speaker maker Koss Corporation had a share price up more than 1,700% for the year. Not a public glance from CEO Koss during the race. The company released second fiscal quarter results on January 28 and made no acknowledgment of stock price volatility in the press release. There was no call for revenue.
But Koss and others inside the company can speak loudly through their actions.
The WSJ reported that nine Koss insiders had sold more than $ 40 million in stock early last week. Three of the initiates (including Michael Koss) were members of the founding Koss family. These insider sales can be viewed here.
An email to Koss commenting on the trading activity went unanswered.
If a CEO deserves a modest tip, it’s Adam Aron, AMC Entertainment’s best dog.
Aron used the 222% rise in his inventory (at one point in late January, the stock had risen over 880%) this year to secure millions of dollars in fresh capital to help his theater chain survive. to the COVID-19 pandemic. The executive also made an appearance in a January 25 press release.
“Today the sun is shining on AMC. After securing over $ 1 billion in liquidity between April and November 2020, through equity and debt raising as well as a modest amount of asset sales, we are proud to announce today hui that over the past six weeks AMC has raised an additional capital injection of $ 917 million to strengthen and solidify our liquidity and financial position. This means that any discussion of impending bankruptcy for AMC is completely irrelevant, ”Aron said.
‘A fine line’
Some say it would be unwise to comment publicly on a stock’s price, especially during this degree of volatility. Hence the silence of the aforementioned leaders.
“As a CEO, you can’t focus on stock price volatility or irrational market behavior. It’s a distraction. Focus on what you can control – operational excellence and growth. These are the fundamentals that generate long-term shareholder value. If these are in place, the market will follow, for better or for worse, ”said Dawn Zier, former CEO and director of the board of directors of Nutrisystem.
Former SEC insider Alma Angotti takes a similar view that CEOs should stay silent until the dust settles.
“It’s very difficult, if you’re GameStop, to make sure you’re not saying something that could be viewed as false or misleading,” says Angotti, currently a partner at Guidehouse. “I’m very sure that if they find themselves in this situation, CEOs talk to their securities lawyers as much as they talk to their public relations to decide what we can say that will not be seen as a change in the market. insane course of action. in one way or another. It’s a fine line. “
If these CEOs are sitting on their hindquarters right now, envisioning a future vacation to the tropical islands they’ll own, well, it’s not clear because none of them have shown their faces through. the stock buying frenzy. But Callaway believes there are several basic actions these senior leaders should take internally.
They include (1) reaching out to all major shareholders and major clients to reiterate that fad doesn’t hurt financial performance; (2) send reminder messages to employees not to talk about the situation on social media; and (3) the establishment of a board committee to review the impact of share price gains on employee compensation plans.
Stresses Zier, “as director of the board of directors and CEO, if raw market volatility that is disconnected from fundamentals becomes more endemic, one must consider the possible impact on executive compensation and retention. Overnight wealth creation that is unrelated to real performance could create risk retention within a management team, among others. ”
It’s good to see these former CEOs speak out on the current situation. Maybe the CEOs of GameStop, BlackBerry, Koss Corporation, and others in the stock meme world could learn a few things here.
Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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