- The Washington Times - Tuesday, March 12, 2002

DETROIT (AP) Ailing Kmart Corp.'s chief executive, Chuck Conaway, is leaving immediately, to be replaced by Chairman James Adamson, who is bringing along a new executive team the company hopes will successfully bring it out of bankruptcy.
The news was anticipated by analysts, who viewed Mr. Conaway's position as tenuous after the company's board stripped him of his chairman title several days before the discounter filed for Chapter 11 bankruptcy on Jan. 22. Mr. Conaway had come on board in May 2000 to take charge of the company's turnaround.
The announcement yesterday came just three days after Kmart announced it was closing 284 stores and cutting 22,000 jobs.
Kmart also named Albert A. Koch, chairman of turnaround management firm Jay Alix & Associates, as its new chief financial officer, replacing John T. McDonald Jr. Julian Day, former chief operating officer of Sears, Roebuck and Co., was named president and chief operating officer.
Analysts and experts say Mr. Adamson and his new team are the best ones to fix Kmart, but warn that it won't be easy, particularly considering the heated competition from Wal-Mart Stores Inc. and Target Corp.
Kmart's stock was up more than 12 percent on the news, gaining 16 cents Monday to close at $1.45 on the New York Stock Exchange.
The company filed for bankruptcy protection following lower-than-expected holiday sales, downgrades by several credit-rating agencies and a stock dive.
Mr. Adamson 54, has a record of helping troubled companies, including Denny's parent Advantica Restaurant Group, Burger King Corp. and drugstore chain Revco Inc. He has been a member of Kmart's board since 1996. As chairman, Mr. Adamson served as the principal liaison between the board and the company's senior management.
Retail consultant Burt Flickinger III, managing director of Reach Marketing, called yesterday's announcement "a healthy and constructive move for the company," and one that he said puts together some of the best-proven turnaround experts.
"It's probably unfortunate that Adamson didn't take over for Conaway right away," Mr. Flickinger said.
Mr. Adamson said Mr. Conaway submitted his resignation to the board Saturday and it was his decision to leave, though the "separation was an evolving process." He noted that Mr. Conaway is leaving two-thirds of his compensation behind. He declined to discuss further terms of the separation package, which is subject to bankruptcy court approval and is to be addressed April 24.
Mr. Conaway signed a five-year contract worth $1.4 million per year with Kmart in May 2000, replacing Floyd Hall. As part of his compensation package, Mr. Conaway was to receive $6.5 million on July 31, 2003, or sooner if he was fired, according to bankruptcy filings.


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