Revolving door for CEOs continues to spin at Confluence

On Nov. 3, we received word that Richard Feehan, CEO of Confluence, was out of a job. Phone calls and emails to sources at Confluence, including Feehan, went unreturned. An email sent to Brian Maney, director of corporate communications for American Capital Strategies (ACS), went unreturned. Insiders we contacted told us Bob Sharp of ACS had issued a gag order to all staff and that any official comment would have to come from ACS. Several individuals with inside knowledge, and not employees of Confluence, did confirm that they had been told Sharp had stepped in and removed Feehan from his responsibilities and that Feehan was still an employee of Confluence, but no one could confirm what exactly Feehan was still doing with the company.

When SNEWS® pressed for official clarification of the situation, we received only the following terse statement by email: “Effective Thursday, November 3, 2005, Robert Sharp, Chairman of the Board of Confluence Holdings Corp., has assumed operational responsibilities of Confluence Holdings Corp. Richard Feehan has assumed other responsibilities within the company.”

Here then is what we do know:

• Paddlesport retailers we have spoken with around the country have confirmed that Confluence is working on being a model citizen. Certainly not yet perfect, but in terms of communication and working to improve margins for the retailer, and in terms of following through on promises and commitments, a major improvement from the past. Several even told us, in light of challenges at other paddlesport companies, Confluence could very well be on its way to once again being a favorite supplier.
• Orders are up according to Confluence and the company is currently running its Easley, S.C., factory — the one it acquired from WaterMark — 24/7. Insiders do acknowledge the company is playing catch-up, in large part because moving the entire operation from Trinity, N.C. — ovens, molds and materials — down to Easley has been a bit more complicated than anticipated. Currently, the facility is producing boats at a rate of 400 per day when output needs to be at 600.
• The company does expect to have over 300 new employees working for it by year end, with half the jobs part time and seasonal, and the other half considered full time. Most of the jobs are for machine operators, assemblers and parts fabricators, with a few positions being filled for shift supervisors as well as administrative positions in purchasing, IT, finance and logistics.
• Insiders at the company have told us that Confluence expects to be fully caught up with backlogged production no later than January 2006.
• Feehan is currently taking a vacation away from the company in Florida. He’s expected to return to Confluence the week of Nov. 14, when he and the company will decide what his future role will be.

There is no ducking the fact that this hiring and then sudden jettisoning of CEOs is becoming a bit of a joke. Bill Medlin, CEO at the time of ACS’ controlling acquisition of Confluence in 2002, was fired on April 29, 2002. Bob Sharp then took the reigns of the company as acting CEO. In March 2003, John Bergeron was hired, and then subsequently fired on Jan. 19, 2004. Rich Feehan was named the new CEO and president on Jan. 26, 2004, and then forced to resign following a lawsuit over a non-compete issue with Johnson Outdoors, his former employer. Feehan went to work for ACS, and Confluence went to being run by a group of company executives which Confluence called a “President’s Council.” It was made up of Kelley Woolsey, vice president of sales and marketing for Confluence; Miriam Beckman, CFO for Confluence; and Bob McDonough, Confluence’s director of R&D. In May 2005, the company acquired WaterMark, and Feehan was once again named CEO. By Nov. 3, he was, like others before him, out of a job. With Feehan’s ouster, Sharp resumed duties as acting CEO.

• Did Sharp and ACS not know what they were getting with Feehan, so much so that they were subsequently surprised by his methods, surprised enough that it required Feehan’s sudden removal? That’s hard to believe since Feehan was working for ACS as a vice president of its operations team since July 2004.
• We were told by insiders back when the move from Trinity to Easley was announced in June 2005 that the entire factory move was carefully scripted and would be supported by the ACS operations team to ensure it went very smoothly. Could it be that since things did not go as swimmingly as imagined that, as a result, Feehan gets to take the fall even though it is really the ACS operations team that should get collectively spanked?
• Is this on the other hand just a simple matter of decisions being made by financial guys for a business that will go woefully awry if decisions are based solely on finances? We wrote in our 2004 article, following Bergeron’s firing and questions over Feehan being able to take over, “If Feehan is able to work through the legal entanglements and does take the job at Confluence, we hope he has a very good parachute. He’ll probably look very good for a few months because of the groundwork Bergeron, Woolsey and the team laid. But the minute he has to ask ACS and Sharp for new machinery or more employees, it’s likely he’ll realize the business is not about people or about a paddlesports company. It is about making the investors happy. And the minute they start grumbling, Feehan had best look for a soft place to land.”
• We are betting that once Feehan returns to Easley and meets with the ACS team, he will depart Confluence and return to working for ACS. Would you want to stay working in the office and at your company after a very public demotion, especially when you used to be the top dog?

SNEWS® View: If you are a believer, as we are, that the buck stops at the top of the food chain in a company, then any short-comings or failures of Confluence as a company can be and should be laid firmly at the feet of one Bob Sharp. And it is possible that this storm of his creation might be harder to weather in the long-term.

Prior to ACS acquiring WaterMark’s paddlesports division, the one saving grace for Confluence was that the staff had been together long before ACS and staff members acted and operated as a family, reveling in accomplishments together and riding through rough spots together. Through all the challenges, that team remained a cohesive unit simply because that is what family does. Until earlier this year, we could talk to anyone at Confluence and it was never about ACS — it was about making the business work for them and for the industry. Sometimes those family members took us to task for our coverage of the family, and that made us smile. Following the acquisition of WaterMark, many of those former family members were notified they were being booted out of the nest and no longer welcome at the dinner table. Reality hits hard with any business when it is entirely focused on the bottom line and not the people.

The fact is, Woolsey has been and remains one of the few constants and has been a point of stability for Confluence. ACS should count its blessings for that. This is not to imply that the current team is not talented, because it is — very much so. However, there is no longer a family glue to hold things together. That could prove to be a bit of a problem if the folks above, namely ACS, start to once again make decisions that are clearly about profits and ROI, and not about what is good for the end-user or the industry. Currently, Confluence is on the right track, positioning its brands clearly, improving margins for retailers, improving delivery track records and working to keep distribution focused. Let’s hope that Sharp keeps the ship on a course laid by Woolsey and the rest of the Confluence management team and stays out of the way.

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