Circuit City CEO: Come Any Closer and I'll Wreck It!

Ever see the cop shows where the crazy guy sits there with a gun to his head and shouts "take one step closer and I'll shoot"? We now know what Circuit City (CC) CEO Phil "The Shill" Schoonover watched as a kid.

Back in February when Mark Wattles disclosed a 5% stake in the company, rumors abounded that he might make a play for it. Schoonover responded by expanding the company's credit line by $800 million to $1.3 billion with an option to add another $300 million at its convenience. It does not seem like much until you consider that prior to this, the company had $49.7 million outstanding against the current credit facility and have total sales of a paltry $2.9 billion. Quite an increase for no apparent reason.

Clearly, Schoonover was trying to protect his job by making the company unattractive as a potential investment. It should be noted here that the now almost 80% drop in the stock price had done that for scores of current investors.

Wattles then called for the a new Board of Directors and nominated his own slate.

Schoonover responded by chopping off his own feet and fired Steven Pappas, the company's "Small Store President," and Peter Weedfald, the Chief Marketing Officer. An important note here is the $6 million bonuses approved in December to retain 10 Vice Presidents and $3 million more to retain Executive Vice presidents, including the now unemployed Pappas and Weedfald. At the time, Schoonover defended the bonuses saying it was important to retain "instrumental executives."

Now word is that Schoonover is seeking to pacify irate investors with a $0.04 dividend. Does he think that makes up for the $16 collapse in the stock price?

Now the company is being removed from the S&P 500 and index funds are dumping the stock by the truck load. Schoonover's moves have backfired as activist funds D.E. Shaw, Royal Capital Management and HBK Investments LP have scooped up over 15% of the shares.

I cannot wait to see Schoonover's next move... maybe random rolling store closings until Wattles "goes away"?

Disclosure: No position.

Comments

[daffy]

I hear ya . . .

Hopefully the stock can rebound to about 4.70 so I can sell my tiny little stake and break even.

I'm out of here

[BrittanyMadison]

So, I am actually a Circuit City employee, and to be perfectly honest, I've seen this coming. We've been getting less and less product in, and less and less vendor support. The hours are almost nothing, and customer service and training are lacking in a big way. It's unfortunate, because when I started working for this company, it was an amazing place, but has never ever been the same since the Lay offs. Though my store wasn't particularly affected by it, it had a ripple effect throughout the company, and leftover associates were left fearing for their jobs. It really is awful to see, but Circuit City had it's time. And Schoonover, well, I met him, let's just say there are better people, being paid by the hour, not by the idea.

Good read, by the way. Have a good one everybody!

[MauroCalingo]

Three questions...

How on earth did the CC board of directors find this jackoff Schoonover? Part of the "old boy" network, perhaps?

And, based on his performance, how does CC justify this jerk's multi-million dollar salary?

Hell, did Schoonover even go to business school, or did he get a mail order "diploma?"

[stormtiger]

It's clear that this current CEO needs to GO! I am about to sue this company called circuit city over a $99 dollar printer that never arrived and that noone can find. After going through all the BS with the alleged customer service it's time for a lawsuit. But what kills me about this CEO's attitude is lets cut costs and piss off every customer. I wonder how he plans to cut these costs when I sue them for $99 and they have to hire an attorney for $5000.00 just to defend them and then lose the lawsuit. Heres a clue for our clueless CEO SOONEROVER THE BETTER, I paid you to deliever a printer and you failed now give me back my money. After talking with the CC customer service and getting the run around I told them we can do this the hardway or the easy way! The easy way pay me my money!
The hardway I sue CC for $99 and they spend $5000.00 defending a lawsuit they cannot win. It's no wonder they are falling and they haven't hit the bottom yet!