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Toys 'R' Us: An Insider Sticks His Neck Out


"Current and former officers and directors of Toys 'R' Us Inc. (TOY) stand to receive a total of $187 million for selling the toy retailer....Chief Executive John H. Eyler Jr. is due $65 million." -- Associated Press, May 2

Just another CEO jackpot, I figured. Then I got to wondering: Why Eyler? So I tried to reach him at his Wayne (N.J.) headquarters. A spokeswoman told me Mr. Eyler was off celebrating his son's graduation and would be unavailable for several days. I left my number. Next, I decided to go looking for Geoffrey the giraffe, the familiar Toys 'R' Us mascot, and drove to the nearest store. Parking was easy. Inside, a few grandmas were killing time with preschoolers. But I found no Geoffrey dolls, toys, or stuffed animals. As a last resort, I went online to toysrus.com. There, for $12.99 plus shipping, I found an 18-inch-tall "Talking Geoffrey." Excerpts of our chat follow:

RB: Geoffrey, what do you make of Mr. Eyler's $65 million?

GtG: I've got seniority over that guy. What do I get?

RB: Sorry, no giraffes are listed in the proxy statement. If it's any comfort, headquarters told me the bosses get the full $187 million only if they all leave when the new owners take over. If Mr. Eyler stays, he's due only $46 million.

GtG: Hmm, $46 million to keep working, or $65 million to retire? Tough choice. I can feel that Tanzanian breeze on my neck already. Who do I call to get some of this?

RB: Too late. This plan was approved by the board of directors' Compensation and Organizational Development Committee. Its chairman, Norman Matthews, stands to get more than $1.7 million in the buyout. I wanted to ask him if maybe a little something had been set aside for veteran giraffes. Sadly, he didn't call me back.

GtG: How do they think I'm going to keep up this goofy grin while all those miserable kids tear up the Bratz displays? I've done my bit around here since 1960 -- long before any of these guys showed up. Haven't we already paid Eyler a million a year in salary, not to mention almost twice as much on average in bonuses and goodies? You know, like using the jet?

RB: True enough, Geoff. But listen: When Mr. Eyler became CEO in January, 2000, the stock was at $11.44; if this buyout goes through, investors will get $26.75.

GtG: Yeah, yeah -- now you listen, Mr. Barker Portfolio. The most you can say about Eyler's record is that it's mixed. That buyout price is pathetic next to the $31 a share the stock brought in May, 2001, weeks before Eyler became chairman and took full control. After that, the stock slid as low as $7.70. It's now down 9% from when he became chairman, about the same as the Standard & Poor's 500-stock index.

RB: O.K. I feel your pain. As the company spokeswoman told me: "To normal people, and I count myself among them, these are very large amounts of money."

GtG: To normal giraffes, too. Sixty-five million? [Here, Geoffrey whipped out a calculator.] That's $1,083 per Toys 'R' Us employee. It's 26% of last year's net income, or 1% of what the new owners are paying for the company. And, wait. Yes, $65 million would pay the annual salaries of 1,257 public schoolteachers in Wayne, N.J. It's enough for 8,793 Save the Children sponsorships over the rest of Eyler's life expectancy. It's almost 11 times what Toys 'R' Us Children's Fund raised last month at its 20th annual gala in Manhattan.

RB: You don't see him giving it all away?

GtG: Nah. Sixty-five mil also buys 590,962 bottles of 1996 Dom Perignon. Anyway, I stick to water -- bottled if you've got it.

RB: Just what would satisfy you, Geoffrey?

GtG: Well, I usually eat hay. Mmmm, let's see, say we figure $90 a ton...that's 722,222 tons.

At this point, Talking Geoffrey's batteries seemed to expire. His voice grew faint, sticking on the phrase, "$65 million ain't hay, $65 million ain't hay, $65 million ain't...."

By Robert Barker


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