America’s Worst Board Members: Thomas J. Tisch Of Sears Holdings

Sears Holdings (NASDAQ: SHLD) has disappointed its shareholders so many times since the company was formed in 2005 as a marriage of Sears and K-Mart, that the disappointments can hardly be counted. The retail firm recently released its first quarter earnings outlook and the stock plunged 10% to $76.

Same-store sales fell 3.6% over the period. Sears said, “We currently expect a net loss attributable to Holdings’ shareholders for the first quarter ended April 30, 2011 of between $145 million and $195 million, or between $1.35 and $1.81 per diluted share.” Sears also increased its buyback, which did not impress Wall St. at all. “The Company also announced today that its Board of Directors has approved the repurchase of up to an additional $500 million of the Company’s common shares. This authorization is in addition to the $86 million worth of shares that remain available for repurchase under the Company’s existing repurchase program.”

All of the bad news ends the honeymoon of new CEO Louis J. D’Ambrosio who has only been with Sears since February. He replaced W. Bruce Johnson who was interim CEO from February 2008 until February 24, 2011. It is incredible that Sears could not find a real CEO sometime during that period. Johnson was rewarded by being dumped from the board and demoted.

The troubles at Sears are the fault of Edward S. Lampert, the controlling shareholder of the company and its chairman. Lampert owns over 65 million Sears shares. He has failed in every way possible to turn the company around.

One of the longest standing Sears directors is Thomas J. Tisch, a man who might have done something to pressure Lampert to step down. Tisch, alternatively, could leave the board. It would be a symbolic gesture, but one that would show he knows how badly the company whose shareholders he serves is run. A trust controlled by Tisch and some of his relatives owns almost 4 million shares. On that basis alone it would seem he would want to leave in disgust.

Tisch was one of the board members who granted Johnson total compensation of $5.3 million last year.

Tisch has not left, a sign that he believe that the company is indeed well run and has done well for its shareholders. Neither is true.

Douglas A. McIntyre