Beleaguered bedmaker Select Comfort Corp. appointed a new board chairman Wednesday, splitting off that duty from the president and CEO titles that Bill McLaughlin has held since 2004.
The Plymouth company's new chairman, Ervin Shames, has been a board member since 1996.
In addition to stepping down as chairman, McLaughlin said he will forgo his annual base salary "until certain performance measures are met."
"These are challenging times for the company -- and the overall retail sector," McLaughlin said. "It's clear that everyone must make sacrifices."
Select Comfort, which makes adjustable air mattresses, is struggling with the housing downturn, tightened consumer spending and an economy that continues to weaken. Earnings have fallen for five consecutive quarters.
As part of his total compensation last year, McLaughlin received a base salary of $690,000 as well as 37,500 shares of restricted common stock under a performance-based award.
The news failed to cheer Wall Street. The stock fell 12 cents to $4.96. The stock is far from its 52-week high of $19.10; the price was $25 as recently as 16 months ago. The stock has been hit hard, much to the delight of short-sellers who profited greatly from the stock's free fall.
Craig-Hallum Capital analyst Bob Evans said Select Comfort's decision was positive.
"We view the move by Mr. McLaughlin to reduce his compensation until certain performance measures are met as a great signal to shareholders," Evans said. "We have no problem with CEOs making a lot of money when shareholders make a lot of money. When they are not, it's nice to see a CEO say, 'I am going to make less until certain standards are met.' It would be nice to see this move by others."
Splitting the CEO and chairman roles is "better for shareholders," Evans said. "There is greater transparency and greater checks and balances."
Analysts long predicted that management changes would take place since the retailer/bed manufacturer has suffered steep earnings declines, slack sales and management missteps in the form of expensive and poorly timed stock repurchases and dismal marketing efforts.
Earlier this week, the company's chief information officer, Ernest Park, left to join 3M Co. after only 21 months with Select Comfort. International Senior Vice President Wendy Schoppert will replace Park.
More recent changes
The company also announced changes in its marketing direction and recently appointed a new marketing manager.
McLaughlin said he agreed with the decision to separate the CEO and chairman roles, saying it's "consistent with leading corporate governance principles."
"I truly believe in the long-term value of Select Comfort," he said.
Dee DePass • 612-673-7725