They’ll Be Back

Imagine for a moment that someone you know has just written his or her name, address and telephone number on the wall of a public building in a nearby park, so that their friends who live near the park will know how to get in touch with them. When you suggest to them that this might not be a good idea, since total strangers now have their contact information and could use it for various nefarious purposes, your acquaintance tells you not to worry; there is no way that anyone would use such innocent scribbles against them, and even if someone wanted to, those letters will soon wash off in the rain and be forgotten. If you just rolled your eyes and muttered something to yourself about people who live in a fool’s paradise, congratulations! You’re smarter than a number of businesspeople who have turned up in the news lately…

I’ve already brought you the story of the Abercrombie and Fitch CEO who was unwise enough to tell an interviewer that his company did not offer larger sizes because they only wanted customers who were within an unfortunately narrow standard of appearance – the “cool kids” as he called them – thus perpetuating negative stereotypes of both status-conscious teenagers and the fashion industry itself in one fatuous statement. What you may not have realized in the resulting media firestorm is that the original blunder was made in 2006, but it didn’t explode and start hemorrhaging money and market share from the company until December of 2012 (or earlier this spring, depending on your point of view). Even more remarkably, it didn’t actually come home to roost for the CEO himself until this week…

You can pick up the original story from the Huffington Post Business page if you want to, but basically the media storm and loss of shareholder equity resulted in 75% of shareholders voting to reject the company’s proposed executive compensation packages and demand lower ones. This is a non-binding vote, which means that so far the consequences are minimal – the company can still pay any of its officers anything it wants to – but if no action is taking the long-term effects are likely to get worse. At the very least, this will make it enormously more difficult to obtain any new investment (would you buy shares in the company at that point?), and if the stockholders are provoked enough they could move into some real stockholder activism, which could include suing the company and the CEO to recover their money…

Of course, we don’t actually know what the CEO of A&F was thinking when he made the original statement, but it seems unlikely that he thought there would be any consequences. The company had been reasonably successful to that point using that product development/marketing strategy, and it would not be unreasonable to suppose that their customer base shared those views about being cool, trendy and elite. At worst, one might expect that a policy statement with which the public and/or one’s customers did not approve would simply fall away into the void and be ignored by the end of the next news cycle. And, in fact, that might even have happened in a pre-Internet era…

It has often been observed that things you see cannot later be unseen, or things you hear unheard; now it would appear that anything you say publically cannot be unsaid – and anything that is recorded can make it onto the Internet and become public whether it was supposed to be or not. This is not to suggest that you can’t say whatever you like; freedom of speech is still a cornerstone of American life and hopefully it always will be. But the notion that you can make an offhand remark and never worry about who will hear it or what they might do as a consequence belongs to another time. If you are speaking publically, on the record, or even just where other people can hear you, be careful with your words. Because they will be back…