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Why the CEOs of GameStop, BlackBerry and others have gone MIA during trading frenzy

·Anchor, Editor-at-Large
·7 min read
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The CEOs of GameStop (GME), BlackBerry (BB), Koss Corporation (KOSS), AMC Entertainment (AMC) and others who have seen their fundamentally beleaguered companies swept up into the recent trading madness of the past few weeks appear to have taken a leadership lesson from Don Corleone.

That is to never let anyone outside your family know what you are thinking. Because for the most part, the supposed public faces of these foundering entities have been anything but public in their responses during the Reddit-fueled trading boom. In fact, they have been flat out missing in action at least in the eyes of John Q. Public.

"I'm stunned. You know I am sure that they have issued a gag order to employees, but I am stunned that the CEOs haven't gone on to say anything," says David Callaway, former CEO of then publicly traded financial media outfit TheStreet. Callaway, now the founder of climate finance newsletter Callaway Climate Insights, thinks all of these CEOs should at a minimum utter something publicly that it's business as usual amidst the insanity.

"People want to know what the hell is going on, and there is a lot of implications to those stocks moving for everybody. So obviously they'll wait until it calms down, but I am stunned they aren't being more proactive," Callaway added.

What has been going on is certainly nothing GameStop's CEO George Sherman, BlackBerry CEO John Chen and Koss Corporation CEO Michael Koss have seen in their executive careers.

GameStop (which has become the face of the mania) shares shot up to an intraday day record high of $483 on Jan. 28 as retail traders on Reddit banded together to squeeze institutional investors short the stock. At that price, GameStop's CEO Sherman saw his holdings in the company valued at $1.1 billion on paper. Sherman joined GameStop in 2019 on a base annual salary of $1.1 million, according to U.S. Securities and Exchange Commission (SEC) documents.

**FILE PHOTO** SEC Monitors GameStop Shares To Protect Retail Investors after a Group Effort to Drive Stock Shares Up To $325 from $17.25. NEW YORK, NY- APRIL 23: View of GameStop as the company announces executive pay cuts and store re-openings during COVID-19 pandemic on April 23, 2020. Credit: Rainmaker Photos/MediaPunch /IPX
**FILE PHOTO** SEC Monitors GameStop Shares To Protect Retail Investors after a Group Effort to Drive Stock Shares Up To $325 from $17.25. NEW YORK, NY- APRIL 23: View of GameStop as the company announces executive pay cuts and store re-openings during COVID-19 pandemic on April 23, 2020. Credit: Rainmaker Photos/MediaPunch /IPX

Shares of the videogame retailer have since crashed back to Earth, trading at about $64 as of Monday morning as Reddit traders search for their next target. Yet, not a peep publicly from Sherman on anything going on with the stock. He didn't even comment in a press release on Feb. 3 announcing a new chief technology officer that will oversee the company's e-commerce business. Typically that level of hiring would get a CEO comment in the press release.

The last time Sherman was heard from publicly came in a Jan. 28 press release detailing GameStop's human rights initiatives. Sherman last acknowledged business trends on a Jan. 11 press release disclosing holiday sales performance — this came before the stock price explosion.

GameStop declined to make Sherman available for an interview for this story. Shocker.

Mum has been the word for BlackBerry and its long-time CEO John Chen, even with its stock at one point in January being up 317% for the year. But unlike GameStop, BlackBerry has at least acknowledged what's happening in the real world.

Blackberry Limited Chairman & CEO John Chen is interviewed on the floor of the New York Stock Exchange, Monday, Oct. 16, 2017. (AP Photo/Richard Drew)
Blackberry Limited Chairman & CEO John Chen is interviewed on the floor of the New York Stock Exchange, Monday, Oct. 16, 2017. (AP Photo/Richard Drew)

"The Company is not aware of any material, undisclosed corporate developments and has no material change in its business or affairs that has not been publicly disclosed that would account for the recent increase in the market price or trading volume of its common shares," BlackBerry said in a Jan. 25 statement.

Chen did not give a quote in that press release. BlackBerry didn't respond to Yahoo Finance's request to make Chen available for an interview for this story. The stock has lost more than 200% since hitting an intraday record high of $28.70 on. Jan. 28.

Speaker maker Koss Corporation on Jan. 29 had a stock price that was up more than 1,700% on the year. Not a peep publicly from CEO Koss during the runup. The company released second fiscal quarter earnings on Jan. 28, and made no acknowledgement of the stock price volatility in the press release. There was no earnings call.

But Koss and others internally at the company may be speaking loudly through their actions, however.

The WSJ reported that nine Koss insiders sold more than $40 million in stock early last week. Three of the insiders (including Michael Koss) were members of the founding Koss family. Those insider sales could be viewed here.

An email to Koss for comment on the trading activity went unanswered.

If any CEO deserves a modest tip of the cap, it's AMC Entertainment's top dog Adam Aron.

Aron has used the 222% runup in its stock (at one point in late January the stock was up more than 880%) this year to secure millions of dollars in fresh capital to help his theater chain survive the COVID-19 pandemic. The executive made an appearance on a Jan. 25 press release, too.

AMC Theaters CEO Adam Aron arrives at the 33rd American Cinematheque Award honoring Charlize Theron at the Beverly Hilton Hotel on Friday, Nov. 8, 2019, in Beverly Hills, Calif. (Photo by Richard Shotwell/Invision/AP)
AMC Theaters CEO Adam Aron arrives at the 33rd American Cinematheque Award honoring Charlize Theron at the Beverly Hilton Hotel on Friday, Nov. 8, 2019, in Beverly Hills, Calif. (Photo by Richard Shotwell/Invision/AP)

"Today, the sun is shining on AMC. After securing more than $1 billion of cash between April and November of 2020, through equity and debt raises along with a modest amount of asset sales, we are proud to announce today that over the past six weeks AMC has raised an additional $917 million capital infusion to bolster and solidify our liquidity and financial position. This means that any talk of an imminent bankruptcy for AMC is completely off the table," Aron said.

'A fine line'

Some say that commenting publicly on a stock price, especially during this degree of volatility, would be unwise. Hence, the silence of the aforemtioned executives.

"As a CEO, you can’t be focused on the volatility of the stock price or irrational market behavior. It’s a distraction. Focus on what you can control which is operational excellence and growth. It’s the fundamentals that drive long term shareholder value. If those are in place, the market will follow, for better or worse," says former Nutrisystem CEO and board director Dawn Zier.

Former SEC insider Alma Angotti has a similar take, that CEOs should stay quiet until the dust settles.

"It's very hard if you are GameStop to make sure that you are not saying something that turns out that can be viewed as false or misleading," Angotti, currently a partner at Guidehouse, says. "I am very certain that if they find themselves in this situation, the CEOs are talking to their securities lawyers as much as they are talking to their PR people to decide what can we say that won't be viewed as moving the stock price inapprporately one way or another. It's a fine line."

Whether these CEOs are sitting on their rear-end at the moment envisioning future vacations on tropical islands they will own, well, that is unclear as none of them have shown their faces through the stock buying frenzy. But Callaway thinks there are several basic actions these top executives should be taking internally.

They include (1) reaching out to all major shareholders and all major customers to reiterate the mania isn't hurting financial performance; (2) sending reminder messages to employees to not talk about the situation on social media; and (3) launching a board committee to review the impact of the share price gains on employee compensation schemes.

Points out Zier, "as a board director and CEO, if gross market volatility that’s disconnected from fundamental drivers becomes more rampant, one has to consider the possible impact on executive compensation and retention. Overnight wealth creation that’s not tied to true performance could create retention risk within a leadership team among other issues."

Good to see these former CEOs speak out on the current situation. Perhaps the CEOs of GameStop, BlackBerry, Koss Corporation and others in the meme stock world could learn a few things here.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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