Potbelly Corp. has named CFO Michael Coyne interim CEO as the company searches for a replacement for soon-to-depart Aylwin Lewis, according to SEC documents.
In May, the Chicago-based sandwich chain said Lewis would depart “later this year.” The SEC filing this week said Lewis would remain chairman of the board of directors through Aug. 8.
Meanwhile, Potbelly also said in the filing that it will make retention payments to top remaining executives to ensure they stay with the company through the end of next year.
Coyne, along with Matthew Revord, chief legal officer, and Julie Younglove-Webb, senior vice president of operations, will be paid $444,375, $416,250 and $382,500, respectively, if they remain with the company through Dec. 31, 2018.
“The company’s board of directors … recognizes that this is a time of uncertainty and that retention of existing talent and leadership during the transition to a new chief executive officer is key to the continuing success of company’s business,” the retention agreement stated.
Retention payments for top executives are relatively common when companies fear they will lose those executives, but they are more likely to come when companies are for sale or face major challenges.
Such payments are more rare in situations in which the CEO has departed. Typically, CEO changes result in numerous changes in executive staff, anyway, because of different management style and corporate strategies.
“The money is rarely well spent,” according to a 2010 article on retention payments from the consulting firm McKinsey & Company. “In our experience, many of the recipients would have stayed put anyway; others have concerns that money alone can’t address.”
In addition to the retention payment, Coyne will receive additional compensation of $25,000 per month for as long as he is the interim CEO.
Coyne has been with Potbelly since 2015, when he joined from CAN Financial Corp. He takes over a company that has struggled to gain traction with investors for years amid generally weak same-store sales and traffic.
Potbelly’s stock more than doubled on the first day of its initial public offering in 2013, nearing $31 per share. But the stock began plunging in the subsequent months, and the next year was below its offering price of $14. It has hovered around $12 ever since.
Same-store sales have weakened more recently, including a decline of 3.1 percent in the first three months of the year.
Coyne also takes over a chain facing an insurgent investor in Ancora Advisors, which has pushed Potbelly to make major changes — including potentially refranchising at least 150 of the chain’s 413 company-owned locations. Ancora said Potbelly should make changes or put the company up for sale.
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