B&O to Pay $2.2 Million Severance to Departing CEO and Brand Manager
B&O to Pay $2.2 Million Severance to Departing CEO and Brand Manager
(Bloomberg) --
Bang & Olufsen A/S just revealed the cost of dismissing its chief executive officer and the severance package represents a sizable chunk of the troubled stereo maker’s dwindling revenue.
B&O is paying a total of 15 million kroner ($2.2 million) to ex-CEO Henrik Clausen and to its former branding executive, John Mollanger, according to the company’s second-quarter earnings report. With sales flagging at the iconic maker of luxury audiovisual products, the cost represents more than 2% of B&O’s revenue in the quarter, and roughly half its free cash flow.
Clausen, who oversaw a 70% slump in the share price in his last 12 months as CEO, was fired in October and replaced by Kristian Tear, a former Blackberry Ltd. manager. Mollanger left a month later as Tear shuffled his management team. B&O declined to provide the breakdown of the two severance packages.
It’s not the first time B&O has had to hand out a large pay package to an exiting chief executive. In 2011, B&O paid CEO Kalle Hvidt Nielsen 14 million kroner in connection with his dismissal. That was about 1.7% of quarterly revenue at the time.
Tear said, “There will be no further costs” associated with the severance package for his predecessor.
The troubled luxury hifi maker, which last month delivered its fourth profit warning in a year, reported an annual 31% slump in second-quarter revenue after adjusting its business model to focus on actual demand. Tear called the result “disappointing,” in a statement on Tuesday.
Shares in B&O gained about 3% on Wednesday. The stock fell 61% in 2019 and 41% in 2018.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net
©2020 Bloomberg L.P.