Dive Brief:
- Funko Inc. CFO and Chief Operating Officer Steve Nave will step down from his role effective March 15 after a year’s tenure in the toymaker’s top financial seat, according to a Thursday filing with the Securities and Exchange Commission.
- Deputy CFO Yves LePendeven will step in as acting finance chief also as of March 15, the Everett, Washington-based company said. LePendeven first joined the company in October 2019 and has served as deputy CFO since August 2023. Funko is not planning to fill the COO role at this time, according to the company filing.
- Nave’s departure comes as the company continues to face economic headwinds, including continued impacts from the past year’s strikes in Hollywood, Funko said Thursday when reporting its earnings results for its fourth quarter and full year ending Dec. 31.
Dive Insight:
Nave joined the company a year ago to help the toymaker execute on its cost reduction and “operational improvement plan,” interim CEO Michael Lunsford said Thursday during the company’s earnings call. Funko creates products including “Funko Pop” figurines, which depict famous or popular media characters.
Nave “led our efforts to address our excess inventory and improve our Buckeye distribution center, negotiate lower shipping costs, rightsize our cost structure, and manage our liquidity and improve our free cash flow,” Lunsford said. The toymaker implemented a cost reduction plan that included eliminating unprofitable product lines, several rounds of layoffs as well as “aggressive reductions in our inventory levels,” Lunsford said.
Nave’s decision to leave was partially influenced by the fact that “we largely completed and accomplished the job I was brought in for,” he said Thursday during the earnings call. The company is in “significantly better financial shape today than this time last year,” he said, expressing confidence in LePendeven’s ability to assume financial responsibilities.
“With the operational improvement plan now complete, my role would focus more on the CFO side, a role that I believe Yves is eminently qualified to assume,” Nave said of his resignation, adding that the weekly commute from his home in Minnesota to Washington has also begun to take a toll on him, his family and the company.
While Funko reported better-than-expected results for its fourth quarter and full year earnings Thursday, seeing its stock rally by 15%, the CFO swap also comes as the pop culture brand braces for persistent challenges.
The recent Hollywood strikes mean Funko is experiencing a “softer content schedule,” while facing uncertainty on shipping costs because of conflict in the Red Sea, Lunsford said.
Funko Pop figurines depict characters from popular franchises including Disney, Paramount Pictures, and Viacom. As of October 2023, the company had about 1,500 licensed products with more than 400 content providers, according to its websites.
“I think it is a light content year from Hollywood, so we're fighting a declining trend there with growth in a lot of other areas,” Lunsford said, including its Pop! Yourself category and its direct-to-consumer channel.
Funko reported net sales of $291.2 million for the quarter, compared to $333 million for the prior year period, according to its earnings results. For the full year, Funko reported net sales of $1.1 billion, as opposed to 2022’s $1.3 billion, as well as gross profit of $333 million, which included $39 million of non-reoccuring charges relating to the company’s cost-cutting efforts.
Nave’s departure is also the latest in a series of executive leadership shifts that have occurred at the pop culture brand during the past year. Engaged as a consultant with Funko prior to joining the company, Nave took on the role of finance chief in February 2023 from interim CFO Scott Yessner, who assumed the interim role in December 2022 when Funko’s previous finance chief Jennifer Fall Jung stepped down, according to a company filing.
Yessner, meanwhile, took on the interim CFO position as the company was dealing with something of a revolving door for its CEO chair. Also in December 2022, Funko’s Chief Creative Officer Brian Mariotti became CEO. Andrew Perlmutter transitioned from CEO to president, before announcing his resignation which becomes effective later this month. Mariotti then took a six month leave of absence in July, leaving Lunsford in the interim CEO seat, according to a July company filing. The company expects to announce a new, permanent CEO in Q2 of this year, Lunsford said Thursday.
As part of his separation agreement, Nave will receive continued base salary payments for six months following his departure on March 15. He will also receive his fiscal year 2023 target annual bonus, as well as accelerated vesting of 30,000 outstanding unvested restricted stock units granted to him which were scheduled to vest on March 29, according to the company filing.
Nave received an annual base salary of $750,000 as CFO, and was eligible for an annual performance-based bonus with a range of 0% to 150% of his base salary based on the board’s discretion, with a target bonus of 75% of his base, according to a February 2023 filing following his hiring.
As interim finance chief, LePendeven will receive an additional $10,000 for each month that he serves as acting CFO, according to the Thursday filing. He will also receive a one-time award of 5,000 restricted stock units to be granted as of the effective date.
Funko declined to comment beyond the details included in the release.
