Chandra Holt, CEO of Conn’s, a Woodlands-based retailer of furniture and electronics, is out after just over a year in the role. She is replaced on an interim basis by Norm Miller, a current Director and the former CEO. No reason was given for her departure.
Conn’s operates 158 retail stores located in 15 states. However, the key to whether the company performs is its Credit Segment. The average credit score of its customers is around 600. This is considered subprime. For the year ended January 2022, the average interest rate it charged on its credit financing was between 18% and 36%. 51% of its product sales were financed in-house, 28% were financed through a third party. Only 21% of purchases were made with cash or credit card.
For the last couple of years revenue was boosted by stimulus spending. Now, with higher inflation, gas prices and interest rates, it is no surprise to find that Conn’s is struggling once again. The stock price has dropped from $27 a year ago to under $7 now. The market capitalization is currently $184 million.
Ms. Holt joined in August 2021 from Walmart, where she led the US eCommerce business and had been the COO of SamsClub.com. Prior to Walmart, she held various leadership roles at Walgreens and Target.
Ms. Holt’s tenure has proved costly for the company. When she joined she received;
- a base salary of $1 million.
- a sign on equity award with a grant date value of $6 million that would have vested over 3 years.
- a pro-rated 2022 equity award with a grant date value of $1.4 million, vesting over 3 years
- a relocation allowance of $330,526
She also received a cash bonus of $2.2 million for the year-ended January 2022 as the company maxed out on its Executive bonus plan.
As a result of her termination, Ms. Holt will receive her salary for the next 24 months, plus a pro-rata bonus for 2022.
The equity awards will continue to vest through the severance period, which means they will be fully vested by the end of it. About a third of the awards were based on the future performance of the company, so they may not be granted at all. And with the collapse in the stock price, they are currently worth about 30% of the original value.
For these keeping score, that’s $5.7 million cash compensation in 14 months (not including whatever bonus is paid for this year). Plus stock worth $7.4 million at the time of award.
Mr. Miller, who only stepped down as Executive Chairman in April, will receive a monthly salary of $210,000. He also received restricted stock worth $1 million and will continue to receive quarterly grants worth $750,000 while he is interim CEO. The stock will vest after one year. In case you are wondering, he received a $1 million salary and a $3 million cash bonus last year .