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BBBY: Did Ryan Cohen Have Anything to Do With CEO Mark Tritton's Ouster?

Did the GameStop chairman and activist shareholder have something to do with the replacement of Bed Bath & Beyond's CEO?

Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report took a sharp tumble on June 29 after reporting disastrous earnings and announcing that its CEO, Mark Tritton, had been replaced. The stock fell nearly 24%, for a cumulative 67% drop in 2022 alone.

Ryan Cohen owns nearly 10% of the company's total stock. And he may have had something to do with the change in the company's command.

Figure 1: BBBY: Did Ryan Cohen Have Anything to Do With CEO Mark Tritton's Ouster?

Figure 1: BBBY: Did Ryan Cohen Have Anything to Do With CEO Mark Tritton's Ouster?

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CEO Mark Tritton No Longer Leading Bed Bath & Beyond

Bed Bath & Beyond reported tragic first-quarter earnings. The company disclosed losses per share of $2.83 — quite worse than the $1.39-per-share losses that experts had predicted. Sales dropped 25% year over year, reflecting a decline in consumer spending patterns.

Then the company announced the departure of CEO Mark Tritton. For now, he will be replaced by Sue Gove, an independent director and board member. The interim CEO immediately released a statement saying that she is aware of the challenges ahead and pointed to macroeconomic turbulence as the main issue:

"I take on this role with a great awareness of the macroeconomic environment. In the quarter, there was an acute change in customer sentiment and since then pressures have increased materially. This includes sharp inflation and fluctuations in buying patterns, leading to a significant shift in our sales and inventory that we will be working to actively address."

Was Ryan Cohen Involved?

In March, activist shareholder Ryan Cohen bought about 10% of BBBY, becoming the company's largest shareholder.

At the time of his purchase, Cohen addressed a letter to Bed Bath's management, questioning the way the business was being conducted and proposing new changes:

  1. He suggested that the company's current strategy of trying to execute dozens of initiatives at once, from infrastructure to cost-cutting, "looks much better on a PowerPoint deck than it does in practice."
  2. He cited his experience with Chewy  (CHWY) - Get Chewy Inc. Class A Report to suggest a simpler approach that starts with strengthening the company's infrastructure while focusing on fixing inventory in the short term.
  3. He pushed to sell Buy Buy Baby, which Bed Bath & Beyond has owned since 2007. This business has good online market penetration, and a sale could ease operational strains for BBBY.
  4. Finally, he proposed a complete sale of Bed Bath & Beyond to a well-capitalized buyer, if possible. This could offer shareholders a premium on their investment and give the company more flexibility to operate outside the public market.

Following the announcement of his demands, Cohen was quite impatient with CEO Mark Tritton. He sent clear messages on Twitter  (TWTR) - Get Twitter Inc. Report about his dissatisfaction with company executives being possibly overpaid despite the company's delicate financial situation:

"No overpaid execs in the metaverse”

"Sent letter to $BBBY board, got no response. Sent an email to CEO asking for a discussion, but got no immediate response. Too busy talking to expensive consultants?"

Because of his profile as an activist investor — Cohen recently climbed to the position of GameStop  (GME) - Get GameStop Corporation Report chair — there's no doubt that he had some involvement in the Bed Bath & Beyond CEO change.

However, no official information about Cohen's involvement has been confirmed yet.

Cohen's Thoughts on Executive Compensation

Interestingly enough, on the very day that Mark Tritton was ousted, Cohen tweeted about executive compensation:

"I’m sick of seeing failed executives make millions in risk free compensation while shareholders are left holding the bag"

Reddit users promptly put two and two together and linked the tweet to Tritton.

As GameStop chair, Cohen has been particularly critical of executive compensation. Cohen was able to lure current GameStop CEO Matt Furlong away from his former position at Amazon  (AMZN) - Get Inc. Report by offering a no-frills role with performance-based compensation mostly via stock awards. And the same model was applied to the rest of the GameStop Board directors endorsed by Cohen.

Mark Tritton's compensation as CEO of Bed Bath & Beyond for 2021 totaled almost $13 million, with roughly half in cash and the rest in stock awards.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)