ShopNBC’s CEO Made $362,000 Last Year In Compensation, Down From $1.5 Million In 2008

ShopNBC CEO Keith Stewart

ShopNBC’s proxy statement was filed last week, and it wasn’t exactly a great year in terms of the cash compensation shelled out to the network’s top dogs.

For example, it looks like Keith Stewart, the homeshopping channel’s CEO, took a substantial cash pay cut. He collected $361,539 last year, just about one-fourth of the $1,525,995 he made in 2008, according to Page 24 of the filing with Securities and Exchange Commission.

Stewart’s “targeted” cash comp in 2009 was a tidy $1,137,500. But the QVC alum didn’t get that, apparently because ShopNBC did not hit its goals.

“No annual cash incentives were paid with respect to fiscal 2009 since the minimum financial threshold for the 2009 annual incentive program was not attained,” the proxy said.

Frank Elsenbast, ShopNBC’s senior vice president and chief financial officer, received cash comp last year of $306,600 versus $328,742 the prior year.

Carol Steinberg, ShopNBC’s senior vice president of e-commerce, made $475,991 in cash comp.

Kris Kulesza, senior vice president of merchandising, collected $325,000, just about half of the cash comp of $601,312 he received in 2008.

And Nathan Fagre, senior vice president and general counsel, made $318,600, just a bit less than his $338,101 he received in 2008.

ShopNBC’s first-quarter conference call is Wednesday, so let’s see how the channel does.

ShopNBC CFO Elsenbast Resigns To Join New Company, McGrath Named Interim CFO

ShopNBC senior vice president and chief financial officer Frank Elsenbast resigned Monday, and is leaving the network to accept a chief financial officer position at another public company, officials said Tuesday.

The executive search firm Spencer Stuart will begin looking immediately for a replacement for Elsenbast, who will remain with
ShopNBC for an interim period to ensure an orderly transition in responsibilities. ShopNBC’s press release didn’t disclose where Elsenbast was going.

ShopNBC's interim CFO Bill McGrath

ShopNBC has appointed Bill McGrath, 52, ShopNBC’s vice president of quality assurance and former vice president of finance and global sourcing of QVC, as interim CFO. McGrath will assume financial management functions until a new chief financial officer is named.

“I have enjoyed my time at ShopNBC,” Elsenbast said in a canned statement. “I have been fortunate to work with a wonderful group of people, and I wish everyone all the best for continued success.”

McGrath joined ShopNBC Jan. 7. Most recently, McGrath served as vice president of global sourcing operations and finance at QVC. During his tenure at QVC, he also served as vice president corporate quality assurance and quality control, vice president merchandise operations and inventory control, vice president of market research and sales analysis, and director financial planning and analysis.

Prior to QVC, McGrath served at Subaru of America as assistant corporate controller and Arthur Andersen as senior auditor. He earned an MBA in Finance from Drexel University and a BS in Accounting from St. Joseph’s University. McGrath is also certified as a CPA and CMA.

According to an 8-K filed Tuesday by ShopNBC, McGrath old compensation terms of will remain in effect while he is serving as interim chief financial officer. He received a signing bonus of $20,000, and his current annualized base salary is $175,000. He also received stock options to purchase 45,000 shares of common stock at an exercise price of $4.97, equal to the closing fair market value per share as of the date of grant. The options vest in equal installments over three years and are exercisable for a period of 10 years from the date of grant.

“Frank has been a valued partner as CFO during his tenure and played an important role since joining the company in 2000,” ShopNBC CEO Keith Stewart said in a prepared statement. “I’d like to thank him for his dedicated service and many contributions to ShopNBC. We wish him well in his future endeavors.”

He’s No Dummy: ShopNBC CEO Keith Stewart To Travel From Frigid Minnesota To The OC For A Conference This Week

ShopNBC will participate in the 12th Annual ICR XChange Investor Conference, which will be held Jan. 13 to 14 at The St. Regis Monarch Beach Resort in Dana Point, Calif.

Shop NBC president and CEO Keith Stewart and senior vice president and chief financial officer Frank Elsenbast will do a presentation at the event.

Gee, we wonder why Stewart is so eager to travel from Minnesota-based ShopNBC to gorgeous Dana Point on the southern California coastline in the middle of winter?

ShopNBC’s presentation will be webcast live at 2:05 p.m. PST (5:05 p.m. EST) Jan. 4. The webcast will be accessible
online at http://investor.shareholder.com/icr/2010/eventdetail.cfm?eventid=76246.

The conference features presentations by more than 120 companies from a variety of branded consumer industries, breakout sessions with management and panel discussions covering retail trends and market dynamics.

ShopNBC Has Gained Traction For Turnaround, CEO Keith Stewart Says

Keith Stewart

ShopNBC saw a slip in sales, but substantially cut is losses in the third quarter, prompting officials to say Wednesday that the company’s turnaround is moving forward.

“The turnaround of ShopNBC has gained traction,” ShopNBC CEO Keith Stewart said during a third-quarter conference call.

“Changes to the business merchandising efforts are starting to unlock our customers growth potential,” he added. “And once you have traction, it’s full speed ahead…Q4 is the right quarter to continue accelerating forward.”

Third-quarter revenue was $119.4 million versus $124.8 million, a 4 percent drop versus the same period last year, as ShopNBC intentionally lowered its average selling price by 49 percent and increased unit volume by 90 percent. Net average selling price was lowered to a record $95 during the quarter versus $187 in the year-ago quarter.

“This reduction in our average selling price is an essential part of our strategy to increase viewership, rebuild out customer base and increase unit volume,” ShopNBC chief financial officer Frank Elsenbast said.

He noted that ShopNBC had changed its product mix to more health, beauty and home items and less high-ticket consumer electronics products.

Adjusted EBITDA was a loss of $5.6 million compared to a loss of $13.3 million in the year-ago period. The net loss for the third quarter was $12.9 million compared to a $20.8 million for the same quarter last year.

Net sales in the first nine months were $372.6 million, a drop from $423 million in the prior-year period. The net loss for the first nine months was $33.2 million, down from $54 million a year ago.

In the third quarter ShopNBC got 1.1 new customers each minute every day, and saw 4 percent growth in net orders, the first increase in seven quarters, according to Stewart.

Judy Crowell

The network added 122 vendors, included big names like actress Suzanne Somers and celebrity plastic surgeon Dr. Robert Rey, who has a show on E! Entertainment Television.

SHopNBC is now “the definitive destination for watches,” with sales up 66 percent in the third quarter, according to Stewart.

Beauty “was another out-performer in the quarter, and it’s firing on all cylinders,” Stewart said.

Beauty sales were up 77 percent over last year, with 29 new brands launched, including Rey’s skincare line.

On the fashion side, ShopNBC debuted 50 new brands and concepts in the third quarter with sales up 6 percent, according to Stewart. It will launch 17 fashion lines before the end of the year, including the Judy Crowell Collection, from the former QVC and HSN host.

Stewart was upbeat about the home shopping business in general and ShopNBC in particular.

“This industry itself will continue to grow over brick-and-mortar,” he said. “The power of the Internet and television is pretty tough to beat.”

As for ShopNBC, the CEO said, “We also have stated previously we will double our sales every five years.”

The network needs 15 percent compound growth quarterly to achieve that target, according to Stewart.

Post Comcast-NBCU Deal, ShopNBC Says To Ask General Electric What It Plans To Do With Its Stake In The Network

Keith Stewart

ShopNBC officials don’t know how Comcast’s expected purchase of NBC Universal will affect the network, where NBCU and its parent General Electric hold a 32.5 percent stake.

“You have to call GE and ask them,” ShopNBC CEO Keith Stewart said Wednesday. “It’s difficult to speculate what GE is going to do.”

During a third-quarter conference call, ShopNBC was asked twice about the expected Comcast-NBCU deal and its potential impact on the network, and Stewart danced around it.

GE/NBC currently owns about 32.5 percent of ShopNBC on a fully diluted basis of 37.6 million shares. NBC’s 6.4 million shares represent 16.8 percent ownership and GE’s 6 million common stock purchase warrants represent 15.7 percent.

First, one investor said he was concerned that if GE was looking to get out of the media business, why would it keep its stake in ShopNBC.

“As for changing the landscape, I really don’t see much of a change in the landscape,” Stewart said. “They are a minority holder, albeit around 30 percent.”

That same caller expressed concern that ShopNBC would lose leverage in negotiating carriage deals if it no longer had NBCU
as a shareholder.

“I really couldn’t possibly say that impacts us negatively or positively,” Stewart said. “We have a very good relationship with Comcast as it is, and what we pay them for distribution, last time I checked they still need a revenue stream.”

A second investor later noted that GE and NBCU have three seats on ShopNBC’s board, and what would be GE’s incentive to keep its stock.

“I don’t know really how to answer that question,” Stewart said, adding that he looks at GE and NBCU as passive investors.

Chief financial officer Frank Elsenbast chimed in, “In the event there was an NBC transaction with Comcast, we still would have a very significant investor in GE owning 13 percent of the company.”

ShopNBC Reports 4 Percent Revenue Drop In Third Quarter, But The Home Shopping Network Cuts Losses In Half

New ShopNBC vendor Suzanne Somers

ShopNBC saw sales slip 4 percent in the third quarter as it shifted its product mix and lowered its average selling price, but the beleaguered No. 3 home shopping network substantially cut some of its losses, the company reported Wednesday.

Third-quarter revenue was $119.4 million versus $124.8 million in the same period last year, as ShopNBC intentionally lowered its average selling price by 49 percent and increased unit volume by 90 percent. Net average selling price was lowered to a record $95 during the quarter versus $187 in the year-ago quarter.

Adjusted EBITDA was a loss of $5.6 million compared to a loss of $13.3 million in the year-ago period. The net loss for the third quarter was $12.9 million compared to a $20.8 million for the same quarter last year.

Customer trends continued to improve with new and active customers up a record 118 percent and 64 percent, respectively, in the third quarter.

Increased customer demand in the quarter led to a 4 percent growth in net orders over last year, the company’s first increase in seven quarters. This is an acceleration of the company’s first half performance of new and active customer growth of 60 percent and 29 percent, respectively.

Return rates for the quarter were 21.9 percent versus 29.2 percent in the year-ago quarter, reflecting improvements in delivery time, customer service, product quality, and lower price points. The customer service contact rate decreased 24 percent in the quarter.

ShopNBC’s Gross profit margin was 33.2 percent, 130 basis points lower compared to last year, driven primarily by increased promotional activity. These promotions contributed to the significant new customer growth the company achieved in the quarter.

ShopNBC noted that it had added a record 122 new vendors to the new and existing merchandise categories of home, fashion, beauty and jewelry.

ShopNBC CEO Keith Stewart

The company launched 58 new show titles, product categories and brands in the quarter, such as Suzanne Somers, Esprit Outerwear, Laundry by Shelli Segal, Sensual Solutions by Dr. Robert Rey, Sensa Weight-Loss System, Brilliante Purely Platinum, the Culinary Institute of America and Griot’s Auto Care.

And a record 103 new guests, 90 of those being experts in their field, were added to the network’s talent ranks, including the hottest celebrity hair stylist Ted Gibson, chef Marcus Samuelson and shoe expert Meghan Cleary.

Operating expenses were trimmed $12 million year-over-year or 20 percent in the quarter. This decrease was driven by broad-based reductions in the company’s cost structure, including lower cable and satellite fees, lower headcount versus the prior-year period, and a significant decline in transactional costs in the areas of order capture, customer service, credit and fulfillment.

In the quarter, ShopNBC successfully concluded all of its carriage agreements that were up for renewal in the last year while preserving 100 percent of its distribution footprint of 73 million homes, leading to a cost savings of about $24 million in 2009 and improved channel positions in many markets.

“Merchandising efforts to unlock our customer growth potential showed real signs of progress in the third quarter, as we build new businesses in strategic product categories,” ShopNBC president and CEO Keith Stewart said in a prepared statement.

“Record gains were made in new and active customer counts,” he said. “Net shipped units were at record levels. E-commerce is proving to be a powerful complement for additional growth. With a focus on delivering a premium shopping experience across our multichannel platform of TV and the Web, the customer is reacting strongly to our initiatives.”

Stewart added, “Year-to-date EBITDA, as adjusted, is $18.2 million better than last year. We are highly focused on delivering the high expectations that have grown during the turnaround of ShopNBC. I remain confident about our fourth quarter plans.”