[1/11/17] One morning in late 2015, on Sears’ vast Illinois campus, more than a dozen employees huddled in a videoconference room on a floor dubbed “B6.”
There, two mid-level employees were preparing a presentation for the CEO, Eddie Lampert, when their boss rushed in with some last-minute advice.
On a chart pad he wrote three words.
“He looks at the presenters and says, ‘Do not say these words to that guy,'” according to a former Sears executive who described the meeting to Business Insider. “That guy” meant Lampert, who would soon appear on a giant projector screen at the front of the room, beamed in live from a home office inside a $38 million Florida estate — 1,400 miles away from headquarters.
The pad with the three words was out of sight of Lampert’s video feed. One of the words on it was “consumer.”
The stakes were high. If any of those words were uttered in front of Lampert, the two presenters would “get shredded” by the CEO, whose frequent tirades had fostered a climate of fear among the company’s most senior managers, said another person — this one a former vice president.
These two and other executives say “consumer” can trigger Lampert. He wants employees to instead refer to shoppers as “members,” which is his term for customers who are enrolled in Sears’ Shop Your Way rewards program.
It was at that moment, as the executive attending the meeting watched fellow employees anxiously censor themselves in front of Lampert, that he realized he needed to flee the sinking 123-year-old company.
Sears is in trouble
Lampert, a former Wall Street prodigy, took control of Sears more than a decade ago and became its CEO in 2013. But he’s rarely seen in the office, typically visiting about once a year for the shareholder meeting and projecting into videoconference rooms at Sears’ Hoffman Estates, Illinois, headquarters the rest of the time, according to interviews with employees. He prefers to stay on Indian Creek Island, off the coast of Miami, behind a desk dressed up with the Sears logo. The island has been dubbed the “billionaire bunker,” partly because of a private police force that protects the island’s 86 residents.
“The only way you see Eddie is through a screen,” one former executive told Business Insider. “We used to joke about who had to go upstairs to get fixed and see Oz.”
Lampert’s physical absence might be better received if Sears, which also owns Kmart, was in better shape. But the retailer, famous for selling everything from shoes to vacuum cleaners to whole houses, is facing its biggest crisis ever. It’s closing hundreds of stores. Others are in shambles, with leaking ceilings and broken escalators. In some, employees hang bedsheets to shield shoppers from sections that stand empty.
Lampert, a billionaire, is trying to keep Sears afloat. He has provided up to $1 billion in financing to help keep it in operation.
Business Insider spoke with more than a dozen employees, ranging from store clerks to senior executives, about the unraveling of Sears. Many spoke on the condition that they not be identified for fear of legal retribution from Lampert and Sears, including one person who specified that she would only speak off the record upon the advice of an attorney. Some said they had signed nondisclosure forms barring them from sharing information about the company.
The content of this article was described in detail to two Sears spokesmen, both of whom declined to comment when asked. Requests to interview Lampert were also declined.
The employees who spoke to Business Insider describe an internal mess with a revolving door of executives and low morale. Senior executives say Lampert has cut investments in stores because he’s trying to turn it into a tech company that collects and sells customer data through the Shop Your Way program.
In the past, Lampert has defended his strategy, saying he intends to turn Sears into a more “asset-light” organization, but one that would still include physical stores. He denies widespread claims that he’s stripping the company of all its most valuable properties and brands and hastening its bankruptcy.
At the same time, he has executed a series of real-estate and financial transactions to help prop up Sears. While the failure of the company could certainly wipe out his hedge fund’s investment in the stock, these deals have set Lampert up to benefit in other ways, creating a conflict of interest, a shareholder lawsuit claims.