Debney Out at AOBC/Smith & Wesson On Eve Of SHOT Show

James Debney, CEO and President of American Outdoor Brands, was dismissed by the Board of Directors today. He had been slated to be the CEO of the American Outdoor Brands sporting goods segment when the company splits later this year.

From The Guardian

From the news release:

American Outdoor Brands Corporation, today announced that its Board of Directors has named Mark P. Smith and Brian D. Murphy as co-Presidents and co-Chief Executive Officers of American Outdoor Brands Corp., effective immediately.   Smith was most recently President of the Manufacturing Services Division of the company, while Murphy was most recently President of the Outdoor Products & Accessories Division.  In their co-leadership roles, Smith and Murphy succeed James Debney, who has separated as President and Chief Executive Officer and as a Director of the company, following the determination by the Board of Directors that he engaged in conduct inconsistent with a non-financial company policy.

The “inconsistent” conduct was not specified in the release.

Mark Smith was already slated to head the new Smith & Wesson Brands, Inc. after the spin-off.

Brian Murphy is now going to become the CEO and President of American Outdoor Brands, Inc. after the company is split into a sporting goods segment and a firearms segment.

Coming just before SHOT Show starts in less than a week, this is an interesting development.

The new release goes on to quote the Chairman of the Board Barry Monheit as saying:

We appreciate James’ contributions toward the growth and development of our company and its infrastructure.  The Board believes the company is fortunate to have two highly capable and experienced leaders in Mark Smith and Brian Murphy.  Each has played a critical role in the development of our strategic plans, including our intention to establish each business as an independent, publicly traded company.  In addition, Mark and Brian have each demonstrated, through years of leadership and service, their extensive knowledge of and passion for our company, our customers, and our industries.  Their capabilities and objectives position them well to share the combined CEO role as the team completes the separation of our two businesses later in 2020.  The Board has every confidence that they will provide the vision and determination to lead each independent company and its highly respected brand portfolio toward a successful future.

The Wall Street Journal reports that the spokesperson for the company did not provide any details on why Debney was fired beyond what is contained in the news release. Their article also takes note that the firing occurred just days before the SHOT Show was to begin.

Debney earned $3.76 million in compensation for the last year. Most of that compensation was due to bonuses and stock awards on top of his $750,000 salary.

S&W To Become Free-Standing Company

American Outdoor Brands Corporation announced today that it planned to separate into two publicly traded companies. One company would be focused on firearms (Smith & Wesson) while the other company would be dedicated to outdoor products (American Outdoor Brands). The split would be finalized in the second half of 2020 according to the press release.

Bloomberg reports that the split is part of “an effort that may help it boost values that have flagged under pressure for gun reforms in the U.S.” “Gun reforms” is the euphemism that Bloomberg is using for gun control.

While something like this would have been in the works for months, I find it interesting that the announcement is being made the day after the Supreme Court denied cert to Remington. Bloomberg does make reference to this in their article as well as moves by retailers such as Dick’s and Walmart to limit what firearms and ammunition they sell.

The official rationale for the split is to let each segment concentrate on their separate markets.

The purpose of the spin-off is to enable the management team of each company to focus on its specific strategies, including (1) structuring its business to take advantage of growth opportunities in its specific markets; (2) tailoring its business operation and financial model to its specific long-term strategies; and, (3) aligning its external financial resources, such as stock, access to markets, credit, and insurance factors, with its particular type of business.

AOBC Chair Barry Monheit said, ” There have been significant changes in the political climate as well as the economic, investing, and insurance markets since we embarked upon what we believe have been our very successful diversification efforts.” It is obvious to me that Monheit is speaking about both national and state efforts to impose more restrictions on firearms ownership and possession.

The move by American Outdoor Brands is similar to that of Vista Outdoor. In that case, Vista Outdoor was the firearms-centric portion of the ATK split. While initially the stronger part of the split company, the pull back in firearm and ammunition sales hit it hard. They finally sold off the Savage Arms portion of the business this summer to concentrate on ammunition and the other outdoor portions of their business.

James Debney, the current CEO, will become the CEO of American Outdoor Brands. Mark Smith will become CEO of Smith & Wesson. He is currently the president of the Manufacturing Services Division of AOBC.

The entire press release can be found here. It goes into much more detail on the lower leadership positions, finances, etc.