Four years after being touted as the one to usher Nautilus to the next level by company founder Brian Cook, Gregg Hammann has “stepped down,” relinquishing his roles as CEO, president and chairman of the board. The move, announced by the company Aug. 13 and said to be effective immediately, came without a stated reason.
Robert S. Falcone, former Nike CFO and a member of the Nautilus (NYSE: NLS) board, will take over all three roles on an interim basis, also effective immediately.
The company announcement was short and included only a cursory comment from Hammann that wished the company luck. Public records for the city of Cedar Rapids, Iowa, show that he now owns a nearly 5,000-square-foot home including a finished basement on the eastern edge of that city, which is nearly 90 miles west of a small farm town where he grew up and just north of Iowa City where he attended the University of Iowa and played on the football team as a wide receiver.
With the public company clammed up and investors unsure what the next step is, chatter on a Yahoo message board had not been profuse as of mid-day Aug. 14, but it had been less than complimentary, with message subject lines the likes of “dive, dive, dive” and “I smell smoke.” Click here to take a peek at the strings.
The stock price closed on Aug. 13, the day of the announcement, at 9.23 on a volume of 1,253,300 and recovered insignificantly on Aug. 14 to 9.24, although volume dropped to 454,200.
The Hammann era began in July 2003, when stock prices had slowly sunk to just under $12 from highs in the 40s to low 60s, and he was bally-hooed as the man who would turn around the company, which was founded with one product, the Bowflex, and grew to include a stable of recognizable fitness brands, including Universal, Nautilus, Bowflex, Schwinn Fitness and StairMaster. Before gaining the company name of Nautilus (or some version of that), the company had been called Direct Focus and, before that, Bowflex of America.
Starting as president and CEO, he was also named chairman of the board in March 2004, taking over the last official company contact by Cook — who had once told SNEWS® his goal was “to become the Microsoft of the health and fitness industry … without the Congressional attention.” (Click here to see a May 2002 interview by SNEWS® with Cook, “Direct Focus CEO Talks to SNEWS® about changes, image, goals.”) Stock prices under Hammann rose in his first two years to a high of just under $30 in mid-2005, and then slowly began their slip downward again over the next two years, reaching an all-time low Aug. 6, 2007, of $8.60, just a week before Hammann stepped down and five years after Nautilus joined the New York Stock Exchange from the Nasdaq exchange.
Also during 2004 and after adding the title of chairman to his calling card, Hammann re-aligned his circle of executive officers, bringing in several he had worked with at other companies or knew from other contacts, such as Tim Hawkins, who left Nautilus a few months ago and worked with him most recently at Levi Strauss; Darryl Thomas, who also worked with Hammann at Levi Strauss; and Ron Arp, whose children attended the same school district. Others from the Cook regime, such as Randall Potter, Kevin Lamar and Al Cockrill, moved on.
Another unresolved question from April 2007 was one raised by the Wall Street Journal when that paper reported that Hammann was among insiders at six public companies who had sold stock in the previous quarter right before those companies reported they would fall short on guidance. That was a pattern, the paper said, “that can attract the attention of regulators and litigious shareholders.” When SNEWS® inquired about the sales by Hammann in late February, spokesman Arp said Hammann had “exercised 18,900 options to pay his 2006 tax obligations. He traded within our window, which is the middle month of the quarter beginning two trading days after our call. It reflected about 3 percent of his option position.”
Falcone, who has more than 33 years of management and board experience, has his work cut out for him since Hammann had also taken on the duties of Hawkins, who was the president of the Fitness Equipment division. Falcone is president and CEO of GCR Custom Research, has served as CFO of Nike, and was a partner of Price Waterhouse LLP.
The board of directors has formed a search committee and reported in the company statement that it will begin the search for a new CEO.
Meanwhile, Falcone said, “I look forward to serving our employees, customers and shareholders as interim CEO. During this important transition period for our company, the board of directors and I are committed to working with our employees to enhance our position as a leader in the strength and fitness industry and charting a course for the future that will deliver strong returns for our shareholders.”