Eggheads top exec will stay
Orbans employment pact expires Aug. 31, but he has no intention to leaveJuly 30th, 1998
Egghead.com Inc.s employment agreement with the executive who has led the Spokane company through its resurrection is about to run out, but he apparently is going to stay with the software reseller.
Eggheads proxy statement from last year says that its employment agreement with the executive, Chairman and CEO George Orban, expires Aug. 31. Orban, however, says through a spokesman that he intends to continue at the helm of Egghead.
I have no intention to leave as CEO. The expiration of my contract has nothing to do with my departure date, Orban said through the spokesman, John Hough, a Seattle-based executive with the Rockey Co. public relations firm who handles press inquiries for Egghead.
Eggheads share price shot up to nearly $15 from $9 in a single day earlier this month after the company announced that its on-line auction sales skyrocketed by 96 percent during its first fiscal quarter, which ended June 27, from the preceding quarter. Auction sales surged to $13.7 million in the most recent quarter from $7 million.
In Internet auctions, buyers bid on products on line by visiting the sellers web site, which keeps track of the current high bid in real time. Egghead says it holds up to 15 auctions a week on its auction site, which is one of three Internet commerce sites it operates. The number of registered bidders for its auction sales climbed to 168,000 at the end of the first quarter, compared with just 29,000 six months earlier.
After Egghead announced its on-line auction results, its share price continued to climb, reaching $29 a share before settling at about $20 a share earlier this month. The promising results from its Internet auctions came just six months after the company, which had been a conventional retailer, closed its 80 remaining retail stores to concentrate on Internet commerce.
Hough says its absolutely correct to say that Orban was the architect of Eggheads comeback. If any one person is responsible for the restructuring and the redirecting of the companyand for its current statusits clearly George, Hough says.
Hough didnt know whether Egghead is negotiating a new employment agreement with Orban, but pointed out that in September the company will have a new board of directors, which apparently would approve any new agreement. Board members Dick Colley, the 74-year-old ex-chairman and CEO of Seafirst Bank, and Sam Stroum, 77, who has been involved in a number of businesses, have asked that they not be renominated to serve on Eggheads board, Hough says.
Eggheads proxy statement says that Orbans base salary in the 12 months that will end Aug. 31 was to be $300,000, and that if he still is employed by the company on Aug. 31, he would receive a retention incentive bonus of $750,000. It also says that if Orban should continue with the company as a consultant from Sept. 1 through March 31, 1999, he would receive an additional $550,000.
Orban moved to Spokane in September 1996 to assume additional management responsibility with Egghead after he had been the companys chairman for about four months. Says Hough, His assignment was to see if there was a company that could be saved. He was looking at all the optionsincluding liquidation.
Hough adds that Orban very quickly got his arms around the Internet as a potentially lucrative place for Egghead to do business.
He says Orban saw that if Egghead was to be involved in Internet commerce, it needed to acquire a company with Internet business experience. Egghead did that last August when it bought Surplus Software Inc., a Hood River, Ore., direct marketer of previous-version software and computer hardware. At the time that acquisition was announced, Surplus Software, which does business as Surplus Direct, operated one of the busiest Internet commerce sites in the nation, Egghead said.
With Eggheads fortunes now on the upswing, the company finally can focus all of its efforts on its go-forward business rather than tinker with problems from its past, Hough says.
The company confirmed two weeks ago that it had secured office space in Vancouver, Wash., and would move its information services, Internet, and distribution administration departments there from Spokane, Portland, and Hood River, and that eventually 170 of its 250 employees would be transferred to the Vancouver location.