Former RadioShack Corp. Chief Executive Dave Edmondson, who resigned Monday following questions about his resume’s accuracy, will receive a cash payout worth at least $1.03 million, the company said Tuesday in a regulatory filing.
Edmondson began receiving four quarterly payments of $243,750 — totaling $975,000 — on Tuesday. He also will receive $57,692 for accrued, unpaid vacation, plus an undisclosed amount for accrued and unpaid salary by Thursday.
The Fort Worth electronics company did not identify the total value of the severance package, which also includes four months of insurance coverage and the ability to exercise outstanding stock options and restricted stock awards early.
The cash payout identified in the regulatory filing is about two-thirds of the $1.53 million he made in 2004 for salary, bonus and other compensation as a chief operating officer, according to the company’s most recent proxy statement. The company has not reported 2005 salary and compensation for its senior executives.
Edmondson, 46, joined RadioShack in 1994 and has been a senior executive since late 1998. He served two years as senior vice president and 4½ as chief operating officer — a tenure worth more than $6 million in salary, bonus and compensation. But his May 2005 appointment to CEO lasted less than one year.
His troubles began last week after a Fort Worth Star-Telegram story identified false information on his resume.
Edmondson claimed on the resume that he had received degrees in theology and psychology from Pacific Coast Baptist College in California, which moved in 1998 to Oklahoma and renamed itself Heartland Baptist Bible College.
The school had no records of the degrees, and Edmondson acknowledged the information about the degrees was “incorrect.”
Mel Fugate, assistant professor at Southern Methodist University’s Cox School of Business, said the severance package and the resignation raise questions about whether Edmondson received favorable treatment.
He wonders if a rank-and-file employee would receive the same consideration as Edmondson if their resume contained errors.
That question was posed to the company last week, but it didn’t answer.
“This highlights the need for better disclosure and understandable disclosure rather than legal speak and hiding things in filings,” Fugate said. “RadioShack employees could be outraged if indeed his treatment is different from what they would get.”
Parting ways with Edmondson on Monday — and on the heels of playing host to a two-day conference with analysts — was hardly hasty, analysts said.
“If you are a member of the board, the question you want to ask is why let this thing fester?” said Donald Trott, analyst with Jeffries & Co. “You are open to getting continuous inquiries from shareholders, the media and analysts. If this is the direction you ultimately are going to go, you might as well get it over with.”
RadioShack’s chief operating officer, Claire H. Babrowski, is serving as CEO while the company conducts an outside search.
Bob Damon, North American president for the corporate search firm Korn/Ferry International, said even with a strong internal candidate, it’s essential to extend the search externally.
“It’s their fiduciary responsibility to shareholders to tell them they did an exhaustive search internally and externally,” Mason said. “It establishes a benchmark, but you don’t want the internal candidates to think they are the benchmark to find someone better; it’s important that they be considered a serious candidate.”
Several analysts who track RadioShack have long been impressed with Babrowski, even before the Edmondson flap.
Bear Stearns analyst Christopher Horvers agreed, writing Babrowski is “a welcome change. We think that Ms. Babrowski will get serious consideration to retain the top spot as the search unfolds.”
Analyst Bill Baldwin, of Baldwin Anthony Securities, suggested that RadioShack’s board of directors bring Chairman Leonard Roberts back as CEO and let Babrowski move forward with the recovery efforts. Roberts served as CEO for six years before being replaced by Edmondson.
“If I was the board, I would give Claire a chance to show her stripes,” Baldwin said. “Let her see what she can do in the tunaround.”
What’s ahead for Babrowski, however, is daunting.
On Friday, the company told Wall Street analysts its fourth-quarter earnings fell 62 percent and it would close 400 to 700 stores, plus two distribution centers.
Horvers wrote that an upcoming turnaround effort could be make or break RadioShack, adding that the company could become a candidate for a takeover.