How Sears Was Gutted By Its Own CEO

[BeckyDem]

David Dayen

October 17, 2018

Eddie Lampert not only ran the company; he was also its largest creditor and the guy who sold major Sears assets to … Eddie Lamper


By now, Prospect readers probably know the basic story of the demise of Sears. The company that pioneered the 20th-century version of e-commerce—the catalog—did not succumb to 21st-century innovations like Amazon and Walmart. Rather, it was dismantled piece by piece by Eddie Lampert, the hedge fund titan (and former Yale roommate of Treasury Secretary Steven Mnuchin) who purchased it in 2005. Lampert and his hedge fund engaged in relentless financial engineering to suck out all the value from Sears and leave a desiccated husk, which now could face possible liquidation in bankruptcy.

But just how much did Lampert vacuum out? That’s a surprisingly hard question to answer, if only because of the variety of schemes he employed. Lampert was at one point simultaneously Sears’s CEO, board chairman, transaction partner, landlord, and banker. (Upon the bankruptcy filing, he stepped down as CEO.) Because of his outsized role as Sears’s number-one creditor, he stands to gain in a bankruptcy even if his shares of Sears stock get wiped out. Through this ploy, Lampert has been able to transfer to himself all the salvageable assets of the company. And so far, it’s worked out.

If you look just to Lampert’s compensation as chairman and CEO, you might conclude that he put all his efforts into making Sears a success. Lampert typically took no salary in his roles at Sears, and despite numerous buybacks and other schemes to raise the stock price, he did not engage in any quick-buck stock sales, opting instead to accumulate shares. Currently, Lampert personally holds a 31 percent stake in Sears, and his hedge fund, ESL Investments, holds another 18 percent. That stock has drastically plummeted to near-zero levels, and Lampert has taken a bath.

http://prospect.org/article/how-sears-was-gutted-its-own-ceo?fbclid=IwAR0sBwpOijKsBdlZYOl7_t2QI362GYdQRIL7PUhmA-f3Zet9cVo75buemic

[Initech]

1. These companies are going under everywhere because of robber baron CEOs.

They tank, rob, rinse, repeat. And it won't stop until we rise up against these monsters.

[BeckyDem]

2. With Sears its especially awful. They go back forever!

[Volaris]

13. Sears has existed for over a hundred years and is,

At least in some respects a national institution...not unlike GM. WHEN it enters final bankruptcy, it should be bought by the treasury Dept, and then leased back to the employees until they put a management team in place that will turn a profit for it's own sake.

Then the treasury should sell it back to the employees for what they bought it for.

This company should be a vehicle for what happens when your CEO fucks you for his own pleasure only, with no regard to your own.

Nationalize the fucker. AND SAVE IT IN DOING SO.
let the randians scream. Do u care?
I dont.
I'm tired of these leeches.

[Beakybird]

3. Just call him Eddie "Lamprey"

[Wellstone ruled]

5. That he is. Blood sucking

Eel .

[Hoyt]

4. Sears -- like ToysRUs -- was pretty much done when it didn't evolve to "Amazon" with some stores.

[Gidney N Cloyd]

10. You can argue Sears failed to evolve but Toys R Us was raped and gutted.

[Hoyt]

11. ToysRUs had already gone bankrupt ten years before resorting to its

last source of funding to keep things going awhile longer. Look it up.

[Gidney N Cloyd]

12. I have looked it up.

[Hoyt]

14. Try another source. Don't wish those bottom feeders on anyone,

but Toys would have been shut down years before with a quick infusion of cash from vulture capitalists.

[moondust]

6. Reminiscent of Mitt Romney/Bain Capital.

Corporate raiders.

http://www.rollingstone.com/politics/politics-news/greed-and-debt-the-true-story-of-mitt-romney-and-bain-capital-183291/

[Power 2 the People]

9. +1

[secondwind]

7. Vulture capitalism at its finest.

[Blue_Tires]

8. That's pretty normal SOP, sadly... Hell, the same thing happened to TWA with Icahn

Who IIRC illegally bought the TWA reservations website (this was before the mega travel websites got large and you had to go direct to an airline's site) and charged "his" airline a ballbreaking amount to lease it.