Sears Holdings Corp. has named Craig T. Monaghan as its new chief financial officer.
Monaghan, who has been the CFO for more than six years at AutoNation, Inc., starts at Sears on September 1. He will report to William C. Crowley, Sears’ chief administrative officer. But Monaghan also is no stranger to the company’s chairman Edward Lampert, the billionaire hedge fund manager who created the company from the merger of Sears and Kmart.
Lampert’s hedge fund, ESL Partners, owns 36 percent of AutoNation’s total outstanding shares, and Lampert has served as a director of the company since 2002.
Before joining AutoNation, Monaghan served as CFO of iVillage.com, the women’s Internet network. He got his training in finance positions at General Motors, Bristol-Myers Squibb, and Reader’s Digest. And he’s no stranger to stressful leadership roles: in 1980, he commanded a tank unit in South Korea and had the authority to launch missiles if the North Koreans fired on his platoon.
In his new position, Monaghan will have to work with a high-profile, hands-on chairman whose influence and mystique is probably most responsible for the fact that the struggling retail giant’s stock is up 19 percent this year while most market indexes are down, and up more than 30 percent since the merger between Sears and Kmart was announced in November 2004.
In an interview with CFO magazine in 2005, Monaghan acknowledged that it is the CEO’s prerogative to get deeply involved in any aspect of the business, but admitted to disagreeing with CEOs about accounting in previous jobs, and arguing, “Look, this is my job. This is what I get paid to do.”
Monaghan recalled drawing this line in the sand with the CEO at iVillage. Just before the company’s initial public offering in 1999, a former CFO made allegations that sparked a Securities and Exchange Commission investigation and threatened the IPO. A summit meeting was scheduled with Monaghan, the company’s audit team, and the SEC to give the company an opportunity to demonstrate why the IPO should proceed. Shortly before the meeting, iVillage’s co-founder and then-CEO, Candice Carpenter, approached Monaghan and said, “Maybe I should go with you and talk to the SEC,” Monaghan recalled.
Up until then, he said, “I’d been managing the whole problem, the investigation, the IPO. My response was, ‘This is my responsibility; let me manage it. If we’re unsuccessful, I’ll accept full responsibility.’”
In the end, Monaghan, accompanied by the company’s auditors and lawyers, was able to satisfy the SEC. “She trusted me,” he said of Carpenter, “even though it must have been very difficult for her to let go of the reins on something so important.”
No doubt Monaghan’s confidence played a role in landing him his new job. He also has had plenty of experience at integration — an important issue for the recently merged Sears and Kmart. Despite the scale of that integration, it pales in comparison to Monaghan’s previous work at AutoNation Inc., which began as an agglomeration of 275 existing auto dealerships. AutoNation isn’t “like Home Depot, where you build on a greensite and replicate the model over and over,” he told CFO magazine last year. “Instead, we inherited 275 unique computer systems, 275 charts of accounts, and 275 cultures.”
Monaghan imposed some order on that system — by last fall, one-third of the company’s stores were doing some of their basic accounting in AutoNation’s shared-services facility, and 20 stores had shifted over entirely, although at the time, Monaghan predicted that the entire project would take another two to three years. “This is not easy,” he says. “It’s naive to think that when you do this, you’re just changing the finance organization. As we change our back-office activities, we inevitably force the front end of the business to change as well.”
No doubt that’s exactly what Lampert is hoping he’ll do.