When I first saw the headline announcing a new CFO of Ruby Tuesday (NYSE:RT) "effective immediately," alarm bells rang in my head. My first reaction was to think, "Here we go again!" Ruby Tuesday over the last year has seen a handful of top executives leave under mysterious and never-explained circumstances. However, despite me being very critical of Ruby Tuesday in the past I actually don't believe this event is a cause for new concern.
Stark contrast to other departures
First there was Matthew A. Drapkin, Chairman of the Board, quit without notice. There was no press release announcing his departure. There were no words thanking him for his service or giving an explanation. In fact, not only was there no explanation, but Drapkin also almost immediately sold his 1.4 million shares of company stock in the open market. He didn't seem like a happy camper, and it the whole thing is just a red flag.
Second and two days after Drapkin ran out the door, Robert LeBoeuf, then Senior VP of Ruby Tuesday, jumped off the ship. Just as with Drapkin, there was no explanation or reassurance. Both resignations came shortly after the company reported results for the prior quarter, and likewise the actual quarter when the resignations took place turned out to be bad as well.
But this time really is different
Third, on June 26, Ruby Tuesday announced the retirement of CFO Michael Moore. Jill Golder was named as his replacement, effective immediately. That's the third executive to quit. Red flag city whether the company calls it a "retirement" or not, right? Well, the word "immediately" in reference to his retiring kind of throws you off and looks scary.
What's different here is Moore will remain on as an advisor through August to help with the transition unlike the other two who quit more abruptly. In the SEC filing that accompanied the press release, it stated that Moore will also retain the title of Executive Vice President in the interim.
Buettgen had nothing but kind words for Moore in the release: "We would also like to thank Michael for his many contributions to Ruby Tuesday during his tenure, wish he and his family all the best in retirement, and thank him for supporting us during this transition."
This suggests it is may be simply a sincere retirement rather than a third sign of a problem. Humans tend to be creatures of habit and the same can be said about companies in their public communications. The retirement of Moore was handled in a much different way than the exodus of the previous two executives.
My point is simple. When executives quit (or are fired?), the departure details tend to be a secret and the executive in question doesn't hang around. In the case of CFO Michael Moore, the entire publicity behind his departure was handled in a completely different manner. So while I'm no fan of Ruby Tuesday and won't be until I see more real evidence of a solid turnaround, I see no reason to add additional concerns in light of the Moore's retirement. No new red flags come up.