Bradley Chhay

RCI Hospitality Holdings, the publicly traded strip club empire and owner of Rick’s Cabaret and Bombshells has announced the abrupt departure of CEO Eric Langan and CFO Bradley Chhay.

Recently, the company and several executives, including Langan and Chhay, were indicted by New York state over an alleged long running tax and bribery scheme. NY claims that the company bribed a state official with “Dance Dollars,” to lower its tax burden. RCI and the executives deny the allegations, but the  stock has been on a slide all year, shedding 58% of its value.

The timing of the resignations is really odd.

In a normal corporate transition, you’d expect something like:

• “Effective immediately” (emergency mode), or

• “Effective at year-end” (pretend this is totally planned and strategic).

Instead, we got an announcement two days before Thanksgiving to take effect the day after. A November 25th announcement, which goes into effect on November 28th.

The C-suite equivalent of “I’m breaking up with you… on Monday. I still need a ride to the airport.”

In those three days, the company nominally gets to say it still has “continuity” while everyone prints new org charts. Starting November 28:

• Travis Reese (current executive vice president) becomes Interim President and CEO

• Albert Molina (current director of financial reporting) becomes Interim CFO

At the same time, Langan and Chhay do not actually leave the building. They stick around as advisors and keep their compensation structures.

Officially this is a “leadership transition” and the board is bravely “positioning the company for the future.” In reality, it looks like the board wanted to show regulators and investors that it did something about the indicted executives without losing the two people who know every lease, liquor license, side deal, and debt covenants by heart.

So shareholders now get an interim management team up front, two indicted ex officio power brokers in the back, and a three day gap between announcement and effectiveness that screams rushed damage control rather than carefully planned succession.

It is less a clean break and more a costume change. The names on the top line of the org chart are different, but if you squint toward the VIP area, you can see the same familiar faces still running the show.