Mitchell Modell, CEO of New York based Modell’s Sporting Goods Inc., was recently accused by sister-in-law Abby Modell of using company money for more than $7 million in personal expenses. Abby claims that Mitchell’s recent offense, after posing as an executive for Dick’s Sporting Goods in one of his competitor’s stores just two months ago, “demonstrates his unsuitability to run the family business.”
This dispute is just one of many plaguing the family after the 2001 death of Michael Modell, Mitchell’s brother and Abby’s husband. Michael left Abby and their children a 50 percent share in the company. Mitchell holds the other 50 percent, leaving Abby to believe she’s not being fairly compensated due to Mitchell’s supposedly reckless spending.
While Mitchell seems to be careless with the company’s funds, with allegations of spending thousands of dollars on family vacations, massages and donations to his children’s school, Abby might be part of the problem. With a $480,000 salary, $40,000 for monthly expenses, and a full-time assistant paid for by the company, Abby says that she is not satisfied.
After four generations, it’s no surprise that the family is beginning to struggle over finances and dominance. The company has paid extra taxes in a previous audit due to improper accounting of personal expenses, and the current problem raises tax liability issues. The Modells need proper conflict management from a family business consultant to help face this challenge and prevent further issues.
At ReGENERATION Partners we help families like the Modells learn to work through their differences and resolve conflict for the betterment of the company. We understand family enterprise and can help you deal with the psychological, emotional and business operation issues that may be holding you back. Call us today if you need a team of experienced, passionate and skilled professionals to resolve conflicts with your family business.
