Sally Beauty Holdings Inc. stock is falling by more than 6 percent to $26.07 after the retailer said its chief financial officer and senior vice president Mark Flaherty is resigning, effective Friday.
The company said his departure wasn’t the result of any disagreement, but it does seem to be a surprise to the market. Flaherty will receive his base salary for 15 months following his termination in exchange for his release of all potential claims against the company. Sally Beauty will also continue to pay the cost of his health insurance through COBRA for the next 15 months. Flaherty made $1,695,575 in 2015, including a base salary of $496,923.
Janna Minton, Sally’s chief accounting officer and controller, will serve as interim cfo until the company appoints a successor.
Cowen and Co. analyst Oliver Chen is maintaining his outperform rating and $29 price target on the firm. “We expect SBH to continue the same transformation strategy, the finance teams have segment leadership which should enable a solid transition, and new cfo search is likely focused on someone with retail/consumer products skills who is consistent with SBH’s disciplined culture,” Chen said.
Chen said the stock could continue to trade sideways until the next catalyst when it reports earnings on Nov. 9. He believes the company has made the right moves with regards to refreshing the store and modernizing their packaging. Unfortunately, customer uptake has been slower than expected.
According to previous filings, Flaherty’s amended severance agreement that was filed in 2012 said that severance benefits would consist of a lump sum payment of 1.99 times the sum of the executive’s base salary and average bonus over the prior five years and continued health insurance at active employee rates for up to 24 months after termination.