Just days after Bed Bath & Bath & Beyond CFO Gustavo Arnal’s death sent shockwaves across Wall Street and beyond, the home-goods retailer made the swift decision to look within its own ranks and pick chief accounting officer Laura Crosssen as its interim finance chief.
The move has stirred debate over the type of permanent finance leader Bed Bath & Beyond now needs, given the company’s litany of problems that include deteriorating finances, shares that have been roiled in part by “meme” stock volatility, a class-action lawsuit alleging the company and other defendants including Arnal artificially inflated its stock price and the death of Arnal Friday by suicide.
One thing that executive search experts agree on is that that the lack of permanent leaders at Bed Bath & Beyond — an embattled company now led by interim CEO Sue Gove who will work with Crossen — highlights the pressure that boards face and the complex decisions that they must quickly make when they lose a key C-suite leader like Arnal unexpectedly.
“Let this be a wake-up call to make sure a succession plan is in place,” Shawn Cole, president of the boutique executive search firm Cowen Partners, said in an interview.
Initially at least, many agree that Crossen, who has been with the company for over 20 years, was a smart and logical choice. She provides the hands on experience that the company needs, both in the wake of Arnal’s death and the recent exodus of a slew of top management — including CEO Mark Tritton in June and Chief Operating Officer John Hartmann last week.
Crossen’s background not only makes sense for an interim CFO, but it’s also not realistic to think that a company could find an external CFO within days after an unexpected death, said Morningstar analyst Jaime Katz.
“Given that there’s nobody left in the C-suite that has been with the company for any period of time, all that institutional knowledge is gone. So this woman coming in, she’s at least got some historical knowledge of what has occurred at this business for the last 20 years,” Katz said in an interview. “Do I think she’s the right person permanently? She’s been in the position for one day … everybody needs to step back and give the company a little grace to figure out what’s going on.”
Cowen Partners’ Cole said in an interview that the company may need to take a two-step approach to finding a permanent CFO. For a company facing turmoil both operationally and on the legal front like Bed Bath & Beyond, bringing a CFO in from the outside the company that is “battle-tested” and able to bring fresh eyes to books and finances can help right the ship, give investors more confidence and steady the waters better than an interim CFO chosen from within the firm, he said.
“In this case they need an agent of change,” Cole said. “An external interim can really clean things up and create a soft landing for your long-term hire.”
Keith Meyer, global leader of the CEO and board practice at executive search firm Allegis Partners, said Crossen was the right choice for the period of crisis that Bed Bath and Beyond is currently in. Meyer also said it was a positive move for the company’s board to tap Sue Gove, an independent director of the board with retail industry experience including as CEO of Golfsmith International, to take the interim position in June.
“I would actually give Bed Bath & Beyond credit for the fact that they had a board member who could step in and be qualified for it. I’d give them a big check mark for that and … to quickly elevate an interim financial leader who would have credibility within the organization [like Crossen] and to have both of those individuals ready to step in …don’t discount how important that is,” Meyer said.
Bed Bath & Beyond, in an email Tuesday, wrote that Crossen has “the full support of the organization, the board and our outside advisors.”
In an emailed response Wednesday to a request for information on the status of the CFO search the spokesperson wrote the company would share more information when it is available. The spokesperson also stated that the company is in the early stages of evaluating the class-action complaint but “based on current knowledge the company believes the claims are without merit,” reiterating a statement made in an Aug. 31 filing.
Editor’s note: If you are having thoughts of self-harm, contact the Suicide & Crisis Lifeline by calling or texting 988 for free and confidential support from trained counselors. Separately, the story has been updated with comments from Bed Bath & Beyond.