John Bergeron was removed as CEO of Confluence during a special Jan. 19 meeting of the company board of directors chaired by Bob Sharp of American Capital Strategies.
When SNEWSÂ® called for confirmation of Bergeron’s termination, we were told only that the decision to fire Bergeron was a board decision. We were also told the board at the same meeting appointed a new president and CEO — Rich Feehan, former general manager of East Coast Watercraft for Johnson Outdoors. Feehan, we were told, would begin his duties on Jan. 26.
Bergeron declined to comment about his dismissal other than to issue the following statement:
“I was amazed when I got to Confluence at how hard-working and how smart and how willing the people were to change. They adapted to new ways of doing things more readily than any other place I have been. Normally, when I come into a company in my position, I am regarded as the Grim Reaper. That was not the case here. I wish them and American Capital nothing but success because there are a lot of good people at Confluence who depend on the company. It will only reflect well on me when they are successful because I am very proud of what I did there.”
Reaction from Johnson Outdoors about Feehan’s hire came swiftly. SNEWS was forwarded several copies of a Jan. 22 email sent to the Johnson Watercraft dealers by Jerry Perkins, COO of Johnson Outdoors. It said, in part: “You may have heard a recent announcement that a former Old Town Canoe general manager has joined a paddle sports competitor. We believe this to be a clear and intentional breach of certain terms of the customary non-competition agreement which was signed by both our former employee and Johnson Outdoors. Among other things, non-competition covenants ensure trade secrets remain secrets, protecting our marketplace competitiveness, our customers’ business and our shareholders’ investment. For these reasons, we are taking immediate and appropriate legal measures to ensure the full protection of our rights as set forth under this agreement.”
We contacted Sharp seeking comment regarding Johnson’s allegations. Our question was met with approximately 10 seconds of silence before Sharp responded simply, “Is there anything else?”
Naturally, we asked Sharp to comment on the reasons for the Bergeron firing. He replied only, “No comment.”
SNEWS View: Our Confluence note file is inches thick, full of interviews over the last three years with Bill Medlin, current and former Confluence employees, John Bergeron, Kelley Woolsey, financial analysts who have been watching from afar, and locals in Confluence’s home town who talk to us whenever there is a bout of layoffs. It is a file filled with sadness and frustration and, frankly, we’re tired of continuing to fill it with more pages that are themselves filled with even more sadness, silliness and frustration.
Still, here we are. In studying the notes, as well as information gleaned from a follow-up interview with Bill Medlin and others after Bergeron was canned, it seems clear to us that Bergeron’s firing follows much the same pattern as Medlin’s, Bergeron’s predecessor. Medlin was as fine a CEO and leader as you will find, but as far as we could tell he got canned for speaking out about layoffs, pay cuts and more. Sharp stepped in as you might recall and tried his hand at being a temporary CEO of a paddlesport company. His tenure resulted in Confluence taking two steps backward: Experienced employees were canned or left. Temporary employee ranks swelled. Machinery was shut down. No new machinery was being brought in. And veterans who actually knew something about rotomolding were no longer around to be asked about it. Retailers began wondering what the heck was happening to the quality of product they had known under Medlin and before. Surely this was not what company founder Andy Zimmerman had in mind?
Sharp’s short-sighted solutions to make the bottom line look better to investors nearly killed the company. Things began to look a bit brighter with the hiring of Bergeron in March. However, the budgets Bergeron had to follow and by which he would be judged were established under Sharp’s watch prior to Bergeron’s hiring. It didn’t take Bergeron long to realize that what he inherited was a company in far worse financial shape than he had been led to believe. Worse, there was no way the company could meet the lofty projections imagined for it by owner American Capital Strategies (ACS).
By fall, the house of cards began to collapse, and Sharp mandated more layoffs as well as pay cuts of 20 percent for all employees. When we spoke to Bergeron then, he said he was not too happy about those moves he was forced to approve. It appears Bergeron may have spoken out too much. Sharp once called Medlin soft for worrying about his employees. Perhaps Sharp felt the same way about Bergeron. Bergeron restored employee pay before the end of the year, and we’re certain that didn’t make Sharp smile either. It is also likely that Sharp was beginning to feel pressure from above and, as a result, someone’s head had to roll. Spin any tale you want — inability to turn the company around and meet numbers, poor delivery of product, talking to the media too much — whatever tale you want, it was sufficient to get Bergeron’s head as the one served up. The ultimately sad thing here is that the Confluence team is a good one, but all this mess created by ACS and by Sharp keeps pulling the company back down into the primordial ooze. We are still stunned that Kelley Woolsey continues to put up a good front and fight on. That company is surviving very much on Woolsey’s ability to hold the pieces together — but for how much longer is anyone’s guess.
Of course, it continues. We wonder if Sharp actually checked about a non-compete clause before hiring Rich Feehan. A SNEWS legal advisor, an excellent labor attorney, told us non-competes are usually very iron-clad, if written properly — especially when it comes to executives who are privy to trade secrets. However, if an employee is forced to sign a non-compete in order to receive severance pay at dismissal, and if that employee is indeed fired, it becomes much harder to enforce simply because the judge will look less favorably on any effort by a company to prevent a person from earning a living.
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.
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