The CEOs of GameStop (GME), BlackBerry (BB), Koss Corporation (KOSS), AMC Entertainment (AMC) and others who have seen their fundamentally besieged companies dragged into the recent commercial madness of the past few weeks seem to have taken a leadership lesson from Don Corleone.
This is to never let anyone outside your family know what you are thinking. Because for the most part, the supposed public faces of these founding entities have been anything but public in their responses during the commercial boom fueled by Reddit. In fact, they are completely lost in action, at least in the eyes of John Q. Public.
“I am surprised. You know I am sure they issued an order of silence to employees, but I am surprised that CEOs have not said anything,” said David Callaway, former CEO of publicly traded financial media clothing TheStreet. Callaway, now founder of the climate finance bulletin Callaway Climate Insights, thinks that all these CEOs should, at the very least, say something publicly that is business as usual amid insanity.
“People want to know what the hell is going on, and there are a lot of implications for the movement of these actions for everyone. So obviously, they will wait until they calm down, but I’m surprised that they are not being more proactive,” Callaway added.
What is happening is certainly nothing that GameStop CEO George Sherman, BlackBerry CEO John Chen and Koss Corporation CEO Michael Koss have seen in their executive careers.
GameStop’s shares (which became the face of the craze) skyrocketed to a $ 483 intraday record on January 28, when Reddit’s retail traders teamed up to squeeze out institutional investors. At that price, GameStop CEO Sherman saw his stake 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).
The video game retailer’s shares have since plummeted back to Earth, trading at around $ 64 on Monday morning, while Reddit brokers sought their next target. However, not a public peep from Sherman about anything that is going on with the shares. He didn’t even comment in a press release on February 3 announcing a new chief technology officer who will oversee the company’s e-commerce business. This level of hiring would normally receive 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 business trends in a January 11 press release, publicizing holiday sales performance – this came before the stock price explosion.
GameStop refused to make Sherman available for an interview for this story. Shocking.
Mom has been the right word for BlackBerry and its longtime CEO, John Chen, even with its shares at one point in January rising 317% in 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 undisclosed material corporate development and has no material change in its business or matters that have not been publicly disclosed that could be responsible for the recent increase in the market price or trading volume of its common shares “, BlackBerry said in a January 25 statement.
Chen did not provide a quote in that 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 more than 200% since reaching an intraday record of $ 28.70 onwards. January 28th.
Speaker maker Koss Corporation on January 29 had a share price that rose more than 1,700% in the year. Not a public peep from CEO Koss during the race. The company released its second fiscal quarter earnings on January 28 and did not recognize the stock price volatility in the press release. There was no earnings call.
But Koss and others inside the company may be speaking loudly through their actions.
The WSJ reported that nine Koss insiders sold more than $ 40 million in shares earlier this week. Three of the insiders (including Michael Koss) were members of the founding Koss family. These internal sales can be seen here.
An email to Koss to comment on the trading activity went unanswered.
If any CEO deserves a modest tip of the hat, this is AMC Entertainment chief Adam Aron.
Aron used the 222% increase in his stock (at one point in late January the stock rose more than 880%) this year to secure millions of dollars in new capital to help his theater network survive the COVID-19 pandemic. The executive also appeared in a January 25 press release.
“Today, the sun is shining on AMC. After securing more than $ 1 billion in cash between April and November 2020, through equity and debt increases along with a modest amount of asset sales, we are proud to announce today that in 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 talk of an impending bankruptcy for AMC is completely out of the question, “said Aron.
‘A cool line’
Some say that publicly commenting on a stock’s price, especially during this degree of volatility, would be unwise. Hence the silence of the aforementioned executives.
“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, which is operational excellence and growth. These are the fundamentals that drive growth. long-term shareholder value. If that happens, the market will move on, for better or for worse, “said former Nutrisystem CEO and board director Dawn Zier.
Alma Angotti, a former SEC member, has a similar view that CEOs should be quiet until the dust settles.
“It is very difficult if you are a GameStop to make sure you are not saying something that can be seen as false or misleading,” said Angotti, currently a partner at Guidehouse. “I am very sure that if they find themselves in this situation, CEOs will be talking to their securities lawyers as much as to their public relations staff to decide what we can say that is not seen as an inappropriate change in stock prices. one way or another. It’s a fine line. “
If these CEOs are sitting in the backseat at the moment, imagining future tropical island vacations, they will own it, well, that’s unclear, as none of them showed their faces amid the stock-buying frenzy. But Callaway believes that there are several basic actions that these top executives should take internally.
They include (1) reaching out to all major shareholders and customers to reiterate that the craze is not hurting financial performance; (2) send reminder messages to employees not to talk about the situation on social media; and (3) launch a board committee to review the impact of share price gains on employee compensation schemes.
Zier points out, “as director of the board and CEO, if the gross volatility of the market that is disconnected from fundamental drivers becomes more rampant, it is necessary to consider the possible impact on executive remuneration and retention. Creating wealth overnight day not tied to true performance can create risk retention within a leadership team, among other issues. “
It is good to see these former CEOs talk about the current situation. Perhaps the CEOs of GameStop, BlackBerry, Koss Corporation and others in the world of meme stocks could learn a few things here.
Brian Sozzi is a general editor and anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi is on LinkedIn.
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