In June 2007, on Rolla Huff’s first day as chairman and CEO of EarthLink Inc. (Nasdaq: ELNK), he purchased 100,000 shares of the Internet company’s stock.
And these weren’t stock options.
He opened his own checkbook and wrote a check for $725,000 to reflect the $7.25 per share price.
“I wanted people to understand that I was going to think like a shareholder,” Huff says. “… I wrote a check out of my checking account to buy shares, so I was going to think about this business like a shareholder, and I wanted my shareholders to know that.”
The move was necessary to rebuild confidence in the business. The former CEO, who was well respected and loved by employees and shareholders, had been diagnosed with cancer the previous November and passed away within a couple of months, so EarthLink was being led by an interim CEO.
On top of that, the company had been highly focused on growth, so it had gone off on several paths that it probably shouldn’t have been traveling on, resulting in some not-so-stellar financial results — it would go on to finish the year with a $145 million loss.
“The business was grappling with the loss of their leader, had an interim leader in place, and had two or three growth initiatives going on that were consuming meaningful amounts of cash and also were resulting in the company reporting net losses,” Huff says. “That was the situation. The share price had been under a bit of pressure, but I think, more than anything, shareholders were looking at the cash being consumed, saw the uncertainty in the executive team and were really pressing to understand what the strategy was and when the company would be profitable and create value for shareholders.”
So after Huff bought those 100,000 shares that first day, he began work on making EarthLink profitable for its shareholders once again.
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