By George Anderson
An arbitration panel has unanimously ruled that Charles Conaway, the former chairman and CEO of Kmart, was not guilty of "fraud, deliberate mismanagement or corporate looting," as accused in a suit brought by creditors of the company.
That Mr. Conaway failed brilliantly to turn Kmart around is without question but the arbitration panel ruled he "acted at all times in good faith and in what he believed to be the best interests" of the company.
Wayne State University professor Peter Henning, a former federal prosecutor, told The Detroit News, "The claim was, in essence, (that) Conaway didn't do as good a job as he could have, but the business judgment rule protects you from 20-20 hindsight. Did he get too much compensation? Maybe. That might be business stupidity, but it's not illegal."
Moderator's Comment: What is your reaction to the arbitration panel's ruling in the suit brought by the Kmart Creditors Trust against Charles Conaway? What did Mr. Conaway do right and wrong during his tenure at Kmart?
The arbitrations panel credited Mr. Conaway with making improvement to Kmart's supply chain, increasing customer satisfaction, selling off obsolete merchandise, reducing excess warehouse space and developing proprietary brands such as Martha Stewart and Joe Boxer.
"On the other hand," the panel concluded, "some of Conaway's decisions proved to be unsuccessful -- initiating Blue Light Always, hiring (Mark) Schwartz as president, and drastically cutting ... advertising."
The panel listed the "Blue Light Always" program as a major failure. - George Anderson - Moderator