Corporate Drama as Beat Zaugg Claims He's Still CEO of Scott Sports

Apr 2, 2024
by Outside Online  
Photo Scott Sports
Photo: Scott Sports

This article originally appeared on our sister site Bicycle Retailer.
Words: Steve Frothingham, Bicycle Retailer





Industry veteran Beat Zaugg, who has been an owner of Scott Sports since 1998, says he remains the brand's CEO, a minority shareholder and chairman of its parent company board, despite a news release Friday saying that the board had fired him.

"This announcement was made to destabilize the company and its employees," Zaugg told BRAIN on Monday; he said the announcement had been made via a PR agency that works for Scott's majority shareholder — Korea's Youngone — not Scott Sports.

He said the dispute arose from a “culture clash” between Youngone and the company.

However, the PR firm responded to BRAIN later on Monday with a statement from the Scott Corporation board insisting that Youngone representatives have a majority on the board and had voted to terminate Zaugg.

"We understand that it may be difficult for Mr. Zaugg to accept his termination (given his long-standing role as CEO). But this is ultimately irrelevant as a matter of law: the ultimate decision body of a company is the board of directors and the board is clearly entitled to terminate the employment with the CEO," the statement read in part.

The statement said that a majority of the board "have resolved to terminate Mr. Zaugg as CEO with immediate effect and that termination has been duly notified to Mr. Zaugg last week. As you will understand the reasons that led to this termination cannot be disclosed at this stage."

Youngone is a supplier to brands including Patagonia, adidas, Lululemon, Outdoor Research, and The North Face, with factories in Korea, Bangladesh, China, Vietnam, and Thailand. It also is a majority owner of the outdoor apparel brand Outdoor Research.

The release last week said Zaugg is being replaced by Juwon Kim a Scott Corporation board member since 2022 and Youngone’s head of growth strategy and mergers and acquisitions.

According to the release, Kim is being advised by Steve Meineke (a former president of Specialized USA, Accell Group and Keen, and an Outdoor Research board member) and Mathias Seidler (a former CEO of Derby Cycle AG).

Zaugg conceded that Youngone controls a majority of the board, but said the board did not terminate him correctly. “So far they did it wrong,” he told BRAIN, without elaborating. “This has to be my secret for the time being,” he said.





Background

Ed Scott founded Scott Sports as a ski industry supplier in 1958 in Sun Valley, Idaho. The brand later entered the motocross and bicycle markets. In 1993 the company sold 55% of its shares to Zell Chillmark Chicago’s Investment Fund (the fund had acquired Schwinn the previous year). In 1998 Zaugg was part of a management buyout of Scott with then-chairman Tom Stendhal and other managers. In 2002 Zaugg acquired a majority of the company and in 2005 he acquired 100% of it, according to a company history.

Youngone acquired a 20% share in Scott in 2013 and expanded it to 50.01% in 2015, taking over the majority position from Zaugg. In December last year Youngone loaned Scott 150 million Swiss francs ($176 million) in a loan that matures at the end of 2024.

Zaugg told BRAIN that Scott is facing challenges similar to those of other major brands. “Like everyone else we have too much inventory, although we are doing a little better than most in Europe,” he said.

He said the 150 million franc loan last year was necessary because Youngone had “destroyed our banking relationships.”

“(Youngone) prefer we are on their infusion … although we had other ways to finance (that) they didn’t let happen. They are always saying ‘We have been so helpful.’”

He said he would be communicating with the board on Tuesday.

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156 Comments
  • 1244 2
 Ironically, this is the type of stuff Scott should have focused on keeping internal.
  • 47 2
 *sensible chuckle*
  • 80 1
 they just routed it in a weird way!
  • 29 1
 Hahaha 11/10.
  • 77 3
 Apparently they aren't concerned about a corrosive environment or having to replace the head of the organization often.
  • 6 2
 Oh, I see what you did there.
  • 31 1
 CEO wanted his shocks hidden too.
  • 11 21
flag WarOnErrorism (Apr 1, 2024 at 21:19) (Below Threshold)
 April fools, it's Jan 6, 2021 all over again?
  • 27 2
 Word on the street is that the internal battle was over headset cable routing.
  • 15 1
 No matter how much shite you try to hide internally, it will come out one day...
  • 7 3
 Smart one. Well done. "Comment of the year's" pretender for sure.
  • 3 1
 Gold
  • 6 1
 (Dignified clap and nodding)
  • 1 1
 @Mugen Bravo sir..... comment gold! lol
  • 3 1
 @Mugen I fully expect to laugh hard at this comment again when I read it on the comments of the year round up in December.
  • 167 1
 April fools… but your actually still not the CEO
  • 159 1
 This would be the most unhinged April Fools ever, I'd have to respect it. But no, it's not.
  • 10 34
flag scott-townes (Apr 1, 2024 at 19:01) (Below Threshold)
 @brianpark: How do you know?
  • 16 0
 @brianpark: Some Michael Scott level stuff right there.
  • 9 0
 @scott-townes: Because Youngone released their press release last week...before April 1st....
  • 5 2
 @neons97: Time zone differences
  • 123 0
 You know what… something just feels dirty about these huge brands. I’m going to make sure that I’m buying my next bike from a smaller manufacturer. Not micro… just smaller.
  • 160 6
 Just keep your older bikes and stop buying new ones.
  • 84 4
 @CSharp: oh sure, and I'll perfect nuclear fusion as well.
  • 5 2
 You just figured this out after reading an article on Pinkbike?

Okay, fess up, you’re not really Canadian, are you Wink
  • 22 5
 may i recommend Banshee?
  • 34 3
 As someone who has dealt with a small brand, they can be dirty too.
  • 11 1
 I'm more concerned with the absence of headset cable routing.
  • 20 17
 Wait until you hear about specialized refusing to pay an entire factory of workers for months worth of wages...
  • 8 2
 @savagelake: or better yet (no offense to Banshee, but you know Canadian and all that) Knolly, or Devinci
  • 42 3
 @thetruejb: read the article, not just the headline.
Chinese owned factory in South America closed. Chinese firm went out of business. Now a human rights group tries to help the workers by publicly asking (putting pressure on) former high profile customers of the firm to pay for it. Sad story about the workers as they were cheated out of their wages by the Chinese company, but I'm not sure I like the approach by the rights group so much either.
Read the article please: www.cyclingnews.com/news/workers-rights-groups-pursue-specialized-for-portion-of-dollar650k-unpaid-wages-and-benefits-to-factory-workers
  • 7 15
flag zoobab2 (Apr 2, 2024 at 2:09) (Below Threshold)
 @onawalk: Banshee is made in Taiwan, some alloy Devinci frames in made in Canada. I avoid Knolly now that they are a patent troll.
  • 1 0
 Would you say…. Average sized?
  • 2 1
 @FaahkEet: EXTREMELY underrated comment
  • 1 1
 @thetruejb: aahhh, I did hear an internetz roumer aboot a main/huge bike manufacturer owing another, 'very large' factory a hell of a LOT of money...............?
No names mentioned other than the 'very large' clue, wonder if this is connected??
  • 3 0
 @savagelake: I forgot about Forbidden as well, another small Canadian brand.
  • 4 1
 @thetruejb: Curious comment,
Like its a Spesh owned factory, and they arent paying their employees?
or they havent paid the contracting factory, which in turn hasnt paid its employees?
  • 7 0
 if you look at this specific case you can see that's futile. Youngone adn their ilk are a parasitic monsters that integrate into everyone's supply chain, especially brands that people think are "small manufacturers". You're either buying directly from the guy who welds your frame or one of these suppliers.
  • 2 0
 @FaahkEet: You don't have a nuclear fusion reactor anyway. So, you can't do anything about that. However, you do have at least one bike you can ride and create power from that. So, go crazy! Wink
  • 1 0
 @naptime: Probably Vitus/Nukeproof think about it.
  • 1 0
 @tempnoo1: don't think they're anywhere near the size the roumer was suggesting. This was more like one of the big three. Spesh or trek owe giant more like? (Im racking my brain trying to remember where I heard this an all I can think of is hambini???)
  • 4 0
 @naptime: Spesh is 49% owned by Merida so they aren't getting frames built by Giant. Trek has frames made by Giant and is in some financial struggles at the moment so that might be what you are hinting at.
  • 1 0
 @naptime: dunno wouldn't trust Hambini, hard to have 25 years of experience and worked on 100 patents when he's only been able to work for 20 of them years lol

He did piss off AbsoluteBlack so much they sent a stalker to him lmao got to respect him for doing that.

I think he's a bullshitter who makes money off the affiliate codes, but his analysis shouldn't be wrong. £245 for a BB though lmao aren't Planetx frames costing that.
  • 102 1
 “You’re fired”
“No”
  • 22 1
 "Yes, you are."
"No, I have a secret about how you didn't fire me according to the protocol."
"..."
"You didn't fill out the cover sheet on my TPS report."
"That has nothing to do with you getting fired"
"Damn, worth a try. I'm out!"
  • 18 0
 @GFozzz: If its Swiss Law, which could be close to German law, then he could be right. In such scenarios there are countless ways to make formal mistakes while terminating the CEO s contract. (Ask me how I know...) But if thats the case, I would have advised him not to tell and just file a lawsuit, in this case the company will have to pay the CEO s remuneration until it realizes and finally does it right.

But of course I don`t know the details.
  • 29 1
 @Vinnijussi: How do you know?
  • 1 0
 @tpfenning: great thanks
  • 19 0
 @tpfenning: Ahh finally - I am a German lawyer specialized in terminations of management contracts. (i do both sides)
  • 3 0
 @GFozzz: "I'm gonna need you to go ahead and come in tomorrow (Saturday)...."
  • 10 0
 I really want his secret to be an Uno reverse card or a 51% stake in Youngone.
  • 87 3
 As far as I am concerned and educated... @dangerholm is the main dude of Scott.
no one else matters.
  • 16 0
 To be honest I thought he was the CEO lmao
  • 8 1
 @dangerholm is the CEO the world NEEDS and deserves
  • 5 0
 I for one would buy at least 10 Scotts if Dangerholm became CEO. Do it Youngone, and then hold me to it.
  • 3 0
 To be fair it does look like instead of brains running Scott they had legs
  • 6 0
 To be fair Nino IS the main dude if you consider that he has shifted hella load of bikes... probably kept Scott afloat.
  • 3 0
 @Treyster8: I'm not an XC fan, but your have an excellent point.
  • 81 0
 I don't think both ceo's will fit in the downtube .
  • 7 3
 Sounds like a headset cable routing problem.
  • 5 0
 IDK have you seen the fuggin' size of the downtube on the Ransom? That's a two, maybe even three, CEO situation.
  • 56 1
 Why I have a feeling in a year or two we will see Scott going from top to total bankruptcy due to new leadership that has no idea what is going on and instead just focus on $$$.
  • 14 3
 There has to be a balance of the two. It sounds like their board understands that their new CEO will need to be advised on specifics of the bike industry by experts, but sometimes folks who are too close to a company can't make painful decisions when the bottom line clearly requires them.

Staying afloat and being perceived as "too corporate" is better than going bankrupt and having a whole ton of people lose jobs.
  • 43 1
 I declare myself CEO of the comments section. My first order of business is firing myself... Done... I am still CEO of the comments section!
  • 44 1
 CE-NO?
  • 42 2
 With so much drama in the LBS, it's kinda hard being S-C-O-double-T. But I, somehow, some way, keep comin up with funky ass features like every single day
  • 5 0
 nicely done
  • 37 0
 Sell your company and find out.
  • 8 0
 Santa cruz revival
  • 25 0
 Exactly. These blokes sell their companies for a shitload of money, and then they complain they don't have the power to take decisions anymore. Enjoy your money, or don't sell your company.
  • 4 0
 If ther previous owner sells and stays for more than 6 months, there will be drama.
  • 29 0
 SHAREHOLDER FIGHT! Economic stimulus for lawyers!
  • 24 1
 I am no rocket scientist but something doesn't add up?

"In 2002 Zaugg acquired a majority of the company and in 2005 he acquired 100% of it"

"Youngone acquired a 20% share in Scott in 2013 and expanded it to 50.01% in 2015, taking over the majority position from Zaugg"

It sounds like Zaugg Munsoned himself and the term "Munsoned" shall now be forever changed to "Zaugged"!
  • 102 1
 I think he Zaugged when he should have zagged.
  • 14 0
 That’s what happens when you sellout, the new people gradually acquire a majority and get rid of you. Happens all the time.
  • 5 0
 I Remember another CEO Selling the company and being fired after that.... From SantaCruz... Corporation will fuck you when they can.. i'm Not buying from corporates holdings anymore
  • 13 0
 @f*cktoryteam: yes, support independent business whenever you can! It matters! I ride a REEB and a RAAW for that reason. If they sell out......next.
  • 10 0
 @Struggleteam: "I riide a reeb and raaw..."

fixed it for ya

Hey Canyon - found your vowels.
  • 28 5
 That was quite a Gambler move, not very Genius at all, triggering a Spark going through all media. Seems like Zaugg is a real Addict to his company. If he's lucky he'll get a Ransom on his way out.
  • 22 1
 What’s the secret? They did the ceo firing handshake wrong?
  • 4 3
 Headset cable routing or not.
  • 20 1
 Weirdest April Fool's day MTB news ever...
  • 2 10
flag tacklingdummy (Apr 1, 2024 at 21:22) (Below Threshold)
 I don't think they would joke about this.
  • 20 1
 Knock Knock.

Who's there?

.....Not you.
  • 5 0
 Knock Knock.

Who's there?

Knock Block
  • 6 0
 Knock knock Knock knock Knock.....yep its the internal routing knocking
  • 6 0
 Knock knock
Who's there?
Scott
Scott who?
Scott f*** all to do with you now, your fired.
  • 19 0
 Dude sets out the corporate Uno reverse card. Respect.
  • 15 0
 Not looking like a brand I want anything to do with!
  • 24 2
 To be fair, Scott didn't look like a brand I wanted anything to do with even before this buffoonery. I think they have a very weird take on bike design and functionality, but were lucky to have good people like Nino Schurter, Marine Cabirou, Brendog or Dangerholm representing their brand.
  • 12 0
 Next press release -- "We are moving his desk into basement now and will send him down there with a can of pesticide ummcay. Hoping the situation will work itself out."
  • 12 0
 Just don’t take his stapler…
  • 5 0
 @PtDiddy: "....burn this place to the ground {mumbling}...."
  • 12 0
 Like an Office episode with assistant to the regional manager type buffoonery...
  • 16 3
 He Zigged when he should have Zaugged
  • 16 2
 Make Dangerholm CEO.
  • 13 2
 This is the news I want. Feed me more TMZ articles about rich boys. That is a dope name though.
  • 12 1
 Wasn't Beat Zaugg the villain in Toy Story 2?
  • 9 0
 The Fifth Element
  • 11 0
 And the moral of this story is don’t sell out your company
  • 26 0
 The moral is when you do, leave.
  • 13 0
 @benpinnick: take the money and run.
  • 10 0
 Maybe we should get the UCI involved to resolve this.
  • 4 0
 Just the road bike portion.
  • 11 1
 Seems like the CEO has been beat.
  • 4 1
 Update: CEO remains beat.
  • 1 1
 Applause!
  • 1 1
 Applause!
  • 5 1
 CEO steps down and creates his own startup SCATT bikes, nobody will notice the difference. In all seriousness the industry needs to crash and burn on these big corporations dime and get back to right sized with private equity, i have no interest in Giant, Specialized or Trek and other brands that have followed in corporate packaging such as Cannondale, Gt etc.
  • 1 0
 Exactly! But when will the general public wise up?
  • 1 0
 @sanchofula: wise and general public don't belong in the same sentence
  • 8 2
 Ok but is Brendog still getting paid?
  • 27 1
 Still getting robbed... of a job this time. Frown
  • 2 0
 I ask myself what "culture clash"? The shareholder company aquiring shares of his company now doing shareholder bizznezz?

sounds exactly like the culture he put himself into in the first place Big Grin

altough the old ransom was a great bike, i can't take this brand serious since quite some time. and exactly this behaviour is not making themself any favour.
  • 7 2
 Go Zaugg! Keep it core, not $$$ ! ! !
  • 4 2
 This sort of pencils out. I always thought there was something institutionally wrong with Scott bikes and their emphasis on proprietary nonsense. There is something egotistical and narcissistic going on there.
  • 4 0
 There will soon be arguments over a red Swingline stapler prior to the building burning down.
  • 6 1
 *Grabs popcorn*
  • 5 0
 Awkward Big Grin
  • 4 0
 As far as one can be from a rider owner company
  • 1 0
 *owned
  • 2 1
 He said the dispute arose from a “culture clash” between Youngone and the company.

So I wonder which party was FOR internal cable routing /shocks and which party was AGAINST?
  • 3 0
 Majority ownership by a multinational conglomerate...what could go wrong ? (ask wiggle CRC ?)
  • 2 0
 Meinike should have stuck to mufflers. He screwed Specialized, Accell, and now Scott.
  • 3 0
 Even more reason to not buy a Scott bike
  • 3 0
 Cue Succession theme song.
  • 4 1
 This seems about as far removed from sports as you can get.
  • 12 0
 Sadly, corporate bullshit takes over everything...
  • 3 0
 Beat Zaugg is the name of my new grindcore band.
  • 2 1
 he's going to beat himself into submission....or resignation. See guys i quit, they didn't fire me.
  • 3 0
 Scott problem is that they think they're boutique brand. They never were.
  • 3 1
 BEAT ZAUGG CONFIDES IN BRAIN!
  • 3 1
 As messy as putting all the possible bits inside the frame.....
  • 2 0
 Scott seems like a complete balls up.
  • 1 0
 Sad Thing, as all these Scott Octanes were my dream bikes back in the days...
  • 1 0
 Scott Board News Release Regarding CEO: Can't be Beat, Won't be Beat.

Apologies to Chuck Norris.
  • 2 1
 Breaking news: General Zaugg seen floating into space trapped in a glass prism.
  • 2 0
 Dick Pound should be declared CEO of Scott
  • 2 1
 In my best Beetlejuice voice "Hey, wanna Zaugg-Nut Bar?.
  • 3 1
 I love this stuff!
  • 2 1
 This reads like April 1 stuff. Just Beat it!
  • 1 0
 Usually people argue that they are not the father of Scott. This is novel!
  • 2 1
 "Any Man Who Must Say 'I Am The King,' Is No True King." .
  • 1 1
 what else does scott have its hands in?
I remember they were DOING ski an moto acsessories before MTB....
  • 1 0
 Toilette paper boxes, with inside integration
  • 1 0
 @f*cktoryteam: :'D
  • 1 0
 P.S who the FK downvotes a genuine question
  • 3 1
 Been paid a Ransom?....
  • 2 0
 Maybe he was a bit of a Gambler?
  • 1 0
 Youngone…more like Yourgone
  • 1 1
 Beat Zaugg = Trump.
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