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Friday, April 06 2018 15:50

Toys "R" Us CEO David Brandon Responds to Critics; Some Store Employees Get Bonuses; More Allege "Sabotage"

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Imagine this... you're the embattled CEO of an iconic American company that is nearing the end of its 70-year history just under three years after you took the top job. You were placed into that position after a much-discussed and controversial run as the Athletic Director of a Big Ten University, during which time you were labeled "villainous", jacked ticket prices for students and families and allegedly retaliated against criticism from fans on a regular basis by attacking them via email - something that led Keith Olbermann to once deem you the "Worst Person in the World." Despite public rallies calling for you to be fired, your resignation and a subsequent book that detailed your epic failure at the college, you left with a $3M severance and were able to find work in 2015 thanks to the generosity of someone you worked for once before... Bain Capital. You see, they were running this toy store that they really wanted to be rid of, so you'd go on to tell the Wall St. Journal just that, and by 2018 you'd be giving your private equity buddies exactly what they wished for all while the public was starting to ask how someone with your experience and reputation could wind up running a toy store. 

But that's ok, because you already had an established history of mocking the "hard-working people on Main Street" while claiming not to support "Mr. Hedge Fund" or "those fat cats on Wall St." It was fine because you did it in a commercial under the guise of giving "a bailout" to the little guy so people would just brush it off as being all in good fun as you sold pizza! Just five days or so prior to filing bankruptcy for this little toy store, you and four other guys were able to split $8.2M in "retention" bonuses, and that was a really good deal. You pocketed $2.8M and the other guys split the rest, and the best part is that in the bankruptcy filings, the company kept things vague by only referring to "certain individuals." The downside is that two months later, a U.S. Trustee named Judy A. Robbins uncovered the names of the five people who received the bonuses, but only when she filed her objection to you asking for further bonuses from the dying retailer you claimed to be saving. A week or so prior to the Chapter 11 filing, someone "with knowledge of the situation" leaked those plans to the media, and then you cited said leak as further hurting the company by blaming the media for reporting it. What's also fantastic is that many believed you when you said that you were working to turn the company around, and you diligently kept up appearances by purchasing a $15.2M penthouse in NYC for yourself just four months prior to the bankruptcy. It's a truly beautiful property, and certainly not one that someone leading a soon-to-be-bankrupt company would purchase. Where it gets a little messy is that in January you had to close the first batch of stores, but you softened the news with a letter that once again assured everyone that the turnaround was happening. Then at the start of February, someone leaked that your private equity buddies from Bain/KKR/Vornado were pushing to liquidate the rest of the company. You likely knew that had to be a good six weeks or so away, so in the meantime you figured it was fine to just keep ordering product, sending your buyers to Toy Fair in New York to keep moving like it was business as usual. When you finally had to pull the plug and shut it all down, you had no problem just laying the blame on everyone else. You blamed your unsupportive customers, your unsupportive vendors, those childless millennials, the jerks at Amazon and Walmart, and perhaps worst of all - those "fake news" pests from "the media" again. You even told employees that you "don't agree with what's happened" and that you "have no authority to change it." There is one big problem, though - 33,000 people were working for you, and tanking the company is killing their jobs. By going silent in the midst of the wind-down, those people are starting to rise up and that's bad. They've even started reaching out to others in unexpected locations, and they're questioning where you are and why you haven't addressed them properly since the conference call in which you told them to get ready for unemployment. Surely there's a proper platform to do this... so why not leave a comment on LinkedIn? Just imagine!

It may sound like an unbelievable work of fiction, but earlier this week, David A. Brandon, Chairman and CEO of Toys "R" Us surfaced with a response to his critics, and he did it in the comments section of one of my LinkedIn posts. What brought Brandon into the comments section was a lengthy thread that was inspired by a photo that I'd shared. Originally popping up on Instagram back in March, the photo of Geoffrey the Giraffe holding up a sign questioning whether the five executives who took bonuses prior to the Toys "R" Us bankruptcy would give them back began to gain steam. I'd received it from a few different TRU employees before sharing it myself along with two suggested hashtags - Isaac Larian's #SaveToysRUs and another more pointed one: #WheresDaveHiding. His appearance came just a day after an executive assistant from the Toys "R" Us HQ in Wayne, New Jersey emerged in the same thread, commenting in defense of the C-level executives and making personal attacks on other commenters, many of whom are current and former TRU employees. Several of her comments either contradicted or denied the public record of filings, and as of today several of her statements have "mysteriously" disappeared (deleted). The statements read as being suspiciously scripted, and Brandon's appearance just a day later came with impeccable timing. Here's what he said, along with my response to him in full:

davebrandon linkedin

My LinkedIn Response to Dave Brandon: "David, while I appreciate that you took the time to surface here on LinkedIn, it’s the thousands of employees beneath you to whom you should’ve been properly communicating.

An American icon has perished on your watch. Under your leadership, careers have been lost, livelihoods have been destroyed, and towns across the country will be dotted with the empty shells of former Toys “R” Us and Babies “R” Us locations - sad reminders of happier times.

You pointed the finger at outside sources including your customers and vendors for “not being as supportive” as you “would’ve liked.” You’ve blamed “the media” for reporting on matters of public record and interest, and have attempted to deflect attention from the despicable, yet court-approved bonus plan that you and your team asked for. The fact that you fell short of the holiday goals required to achieve your bonus payouts is a moot point. The record shows that you and 16 other members of your team were in line to accept reward in the midst of failure… should the opportunity have presented itself.

But didn’t you already accept a reward for failure just days prior to the bankruptcy filing?

How do you defend that in front of the people that really matter - your ‘R’ Us “family?”

Despite any actions you may be engaged in NOW in order to save some part of the company that once was, your army of troops on the front lines (your stores) have been reduced to creating memes and hashtags to get the attention of the man who they once believed was there to help them succeed. Look at the image above and answer THOSE people. You don’t owe me anything, but you owe your organization some real answers… people with families, many of whom have invested decades of their lives into an organization that in just under three years of Dave Brandon will cease to exist.

And since you did point out that you’re meeting regularly with your Board of Directors (which you also Chair), I do have to wonder… is that supposed to be a selling point? After all, most of the folks on the BoD are representatives for the very companies at the heart of this destruction. Do you honestly think that any of your stakeholders would believe that those who work for Bain Captial, KKR or Vornado have their best interests in mind?

The world is watching you Dave, and what they’ve been seeing of late is really just a bunch of noise from someone who pretends to be a leader… but isn’t.

When the case studies on Toys “R” Us are written, the legacy of David A. Brandon will be one of failure."

Four days later, Brandon has yet to respond, and he probably shouldn't, though as his alleged University of Michigan email antics have shown, he may have found it difficult to resist jumping into the fire for a bit. There's a reason why PR firms exist to handle "crisis" situations, and when it comes to Toys "R" Us, they even have a strong internal crew on the communications front. While I'm certainly no attorney or expert in matters of law, I'd imagine that in a situation such as this, a lawyer should probably be taking a look at any statements being issued on behalf of those directly representing a company, especially when it's a CEO... or one of their executive assistants making them in a public forum or social network. LinkedIn has a great feature called "Who's Viewed Your Profile," and unless the user is browsing in private they show up. In the past week, mine has been like a baseball cards or Pokemon, but instead of collecting characters, it's been profile views from nearly the entire crew of top-level Toys "R" Us execs. Surely they have better things to do?

"Brandon’s usual response to backlash against his decisions is to blame someone else for them..." -- SLATE, 10/31/2014

More Toys "R" Us Updates: While there's no real good to come from all of this, I do need to point out that a bonus program has emerged for Wave Two closing stores, which is a tiny positive for a few people. The "Store Closing Bonus Plan" provides bonuses for managers, assistant managers and keyholders at store-level, offering what amounts to about a week's pay. A copy of the 3-page plan was received from a source on the condition of anonymity, as is customary in these situations. Still, hourly employees are left with absolutely nothing. 

Additionally, more vendors are coming forward with allegations of wrongdoing. As previously reported, numerous companies have joined a motion by Crayola in which they allege that Toys "R" Us engaged in "irresponsible and potentially illegal behavior relative to Crayola" and other vendors. Some of the latest to join are New Ventures, LLC, who shipped private-label product between December '17-February '18 and Heritage Baby Products, which states that TRU "with knowledge at some juncture of their impending liquidation, purposely induced Heritage to continue shipping goods" as late as March 6. Meanwhile, a group including KidCo, Inc., The Maya Group, Peg Perego USA, Inc., Kolcraft Enterprises, Inc. , LulyBoo, LLC , Bexco Enterprises dba Million Dollar Baby, Bassett Furniture Industries, Inc. , Export Development Canada, and Halo Innovations, Inc. have joined Crayola in the fight. They don't hold back in their filing, stating that TRU "loaded up on goods, and in a blatant attempt to operate their chapter 11 cases through sabotage, informed vendors of their financial condition and liquidation plans only after the fact." Finally, there is Kent International, who has some of the most strongly-worded filings in the bunch (here and here). Kent says that TRU's team has "spectacularly failed," and calls the entire affair a "cautionary tale" with allegations of "negligent, (or, perhaps, fraudulent) solicitation of post-petition goods and services for the benefit of post-petition secured lenders and professionals." 

The entire Toys "R" Us collapse becomes more fascinating by the day, and I believe that it's far from over. More and more employees are coming forward with stories that someone somewhere will tell. Will all of this end up in some kind of Federal investigation, and if so - who will take the blame?

Pictured Top: Geoffrey stands near a "now hiring" sign in front of a closing Toys "R" Us store. The photo was sent by an anonymous Toys "R" Us employee as hiring continues to assist in the wind-down operations in which store-level staff are being faced with a looming end and increasing hostility from bargain-seeking customers unhappy with the lack of deep discounts.

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James Zahn

James Zahn is not a journalist, nor a blogger, though he may be credited as such by others, or even accept the title... depending on the circumstance.  Instead, he considers himself largely to be an "entertainment and lifestyle writer," bringing 25+ years of experience in the entertainment and publishing industries into the family realm as THE ROCK FATHER™.

As a media personality, commentator, adventurer and raconteur, James now finds himself raising a pair young girls - The Rock Daughters™ - along with his wife from their Illinois home.

He is a member of The Toy Insider Parent Advisory Board, has contributed to The Toy Book and writes a regular Star Wars column - Transmissions from a Galaxy Far, Far Away for The Pop Insider. He also regularly serves as a Brand Ambassador and spokesperson for several Globally-recognized pop culture and lifestyle brands in addition to consulting for a number of toy manufacturers. 

Creatively, James has directed/edited music videos, lyric videos, and album trailers for bands such as FEAR FACTORY, has appeared as an actor in feature films and commercials, written comic books, and performed in bands. He currently serves as an artist manager and video director for PRODUCT OF HATE, whose debut album was released by Napalm Records in 2016, distributed by ADA/Warner Music in the U.S. with Universal Music handling global.

James and/or his work have been featured in/on CNN, FOX Business, NBC, ABC, WGN, G4, The Chicago Tribune, BusinessWire, Babble, Fangoria, Starlog and more. He's appeared as a music expert on CNN's AC360 alongside Anderson Cooper, and has been interviewed by Larry King. In the past he served as a writer for the Netflix Stream Team,  Fandango Family and PBS KIDS, penned articles for Sprout and PopSugar, and was a contributor to Chicago Parent.

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