Management Turnover as Change Agent

GM Update: It's official - Henderson out, Time Magazine's Alex Taylor III Explains Why

2009-12-02T13:55:00.003-05:00

Alex Taylor III wrote a brief story for Time on GM’s surprise announcement that Fritz Henderson was out as GM’s CEO and Ed Whitacre, GM’s chairman would serve as interim CEO until replacement is found. Taylor was right on the mark in his explanation. IN the story he wrote,

Henderson will be remembered as being as smart and experienced as any GM CEO, but he appeared tone-deaf when it came to listening to Whitacre and the rest of his board of directors. Since he had no role in picking them and they owed him nothing, that proved to be a fatal mistake.

When the board made it clear that it wanted Henderson to replace chief financial officer Ray Young, Henderson dawdled. He could rightly complain that government curbs on executive pay made it difficult to recruit experienced financial executives, but it must have looked to the board as if he couldn’t make a decision or was simply stalling.

Check it out, it’s worth the read.

For a bit more read:

Slate

Not Official - Fritz Henderson, GM's CEO to Resign

2009-12-01T16:47:00.001-05:00

The internet is abuzz with rumors that Frederick “Fritz” Henderson, GM’s CEO who took the reins after GM’s longtime CEO Rick Wagoner was forced out, is about to resign. The rumor is yet to be confirmed but appears quite plausible. According to CTV News Chairman Ed Whitacre, Jr. will serve as the interim CEO until a replacement is found for Henderson. Let’s hope GM selects someone innovative and ready to go. While Henderson was a vast improvement over Wagoner he has still not shown the kind of leadership necessary to take the new company out of the abyss.

Marks and Spencer Hooks Big Fish for CEO

2009-11-18T10:59:00.002-05:00

Marks & Spencer’s MKS (LSE) well known CEO Sir Stuart Rose, who has been instrumental in turning the fortunes of the British clothing retailer around, will officially be replaced next year. The company has been working on a CEO search for nearly two years. Rose was even on my CEO Watch list back in September 2008. M&S selected Marc Bolland ,the highly regarded CEO of supermarket group William Morrison Supermarkets PLC, as it new CEO. Bolland is a real catch for M&S and a serious loss for William Morrison. According to a story by Sarah Shannon for Bloomberg,

Bolland joins M&S as the company seeks to restore same- store sales growth after two years of decline. He spent three years as CEO of Morrison, restoring profit after the 2004 purchase of competitor Safeway led to the company’s first-ever loss. M&S gets close to 50 percent of sales from food.

“To get someone with credibility in place is a huge positive,” said Paul Mumford, a fund manager at Cavendish Asset Management who holds Marks stock. M&S’s food division has been “suffering” from cheaper-priced supermarkets and Bolland will “help them move towards winning back market share.”

… The appointment “removes the uncertainty that’s been hanging over the stock for some time,” according to Mumford.

… “He brings a wealth of consumer marketing experience and has made a great success of his time at Morrisons,” Rose, who will remain as M&S’s part-time chairman, said in the statement. Rose will stay on to “ensure a smooth transition,” the retailer said, and will leave as planned by July 2011.

Bolland’s selection is a real feather in M&S’s hat. Despite the long amount of time it took to find a CEO, Bolland has many of the qualities M&S needs as it moves forward. According to a story by James Davey and Mark Potter for Reuters,

Bolland is widely regarded as having delivered a successful turnaround at Morrisons. Previous to that job he was chief operating officer at Heineken (HEIN.AS) based in the Netherlands.

… He took the reins from Ken Morrison, son of the founder and a major shareholder, and showed the kind of diplomacy he may need during what could be a period of powersharing with Rose.

Rose said the handover period would be about six weeks.

Ignoring some analysts’ calls for him to sell off Morrison’s food manufacturing operations and invest in non-food ranges, Bolland stuck with the group’s traditional “Market Street” format of fresh food counters and gave it a makeover.

Combined with innovative promotions and new product ranges, he transformed Morrison into the fastest growing of Britain’s top four food retailers for most of the past two years.

Bolland’s greatest risk as M&S’ new CEO is his lack of clothing expertise. He seems to be a quick learner and I would expect he will rely on his team to help him come up to speed. Stay tuned.

For more:

EMS Technologies Makes Change at the Top

2009-11-13T11:00:00.001-05:00

EMS Technologies EMLG (NASDAQ), the maker of software used in satellite and ground networks, on Wednesday announced the immediate resignation of Paul B. Domorski, as CEO and board member of the firm. In his place, the company selected Neilson A. Mackay, the company’s executive vice president and chief operating officer. The announcement came shortly after the firm’s stock suffered a 28% fall after the company announced a sizeable decline in net profits for the third quarter. According to a story by Peralte C. Paul for the The Atlanta Journal-Constitution,

John B. Mowell, EMS Technologies’ chairman, said the change is not because of the company’s recent earnings performance. The company reported last week it made a third-quarter profit of $5.3 million, down from $6.1 million a year earlier.

“It was a tough decision; it was not instigated by earnings,” Mowell said in an interview Wednesday. “This is not a reaction to an over-weakness on the part of Paul. He is a great leader, and he is a great man.”

The chairman then went on to state,

… the board opted to put Mackay at the helm because the company needs a leader with the technology and engineering background in addition to the business credentials.

It appears obvious that despite what the chairman said, the change was precipitated by the significant earnings decline and poor performance of the firm during the third quarter. The change from within may actually bode well for the firm going forward. Mackay has been with the firm for some time and understands the business. Domorski was not the only key change at the firm over the last number of months. Back in August , David A. Smith abruptly resigned as vice president and general manager of the company’s Defense and Space Division.Keep a close eye on the firm for the next couple of months.

Must Read - AIG's Benmosche Threatens to Jump Ship, Wall Street Journal

2009-11-11T11:04:00.006-05:00

Anyone following top executives has to read today’s story by Liam Pleven, Serena NG, and Joann S. Lublin in the Wall Street Journal. The column is entitled, AIG’s Benmosche Threatens to Jump Ship. Benmosche, AIG’s hard charging CEO, appears to be exacting pressure on the AIG board and the Obama Administration.

At a board meeting last week, the strong-willed industry executive told fellow AIG directors that he was “done” but agreed to think it over after other board members reacted with shock, according to the people.

… It isn’t clear whether Mr. Benmosche would actually resign. In his short tenure at AIG, he has developed a reputation for making provocative remarks and ruffling feathers as he seeks to achieve his goals.

He has only been CEO for three months and continues to make waves. He has a little of AIG’s famous former CEO Hank Greenberg in him. Check out the story.

For more:

CEO Watch List - S. Sundaresh, Adaptec Update #1

2009-11-03T10:19:00.002-05:00

Sundi Sundaresh’s reign as Adaptec CEO is looking more and more precarious. Steel Partners, an activist investor/shareholder, is claiming to have the votes to get him dismissed. Steel Partners has been working for more than a year to make management changes at the firm. According to a story by Chris Mellor in the UK’s Register,

AP is now reporting that Steel Partners claims it has amassed enough proxy votes from shareholders to boot Sundaresh off Adaptec’s board. The board says it’s waiting for certification of the votes cast before ceding or claiming anything.

If Steel Partners is certified as having sufficient written consents from shareholders then Sundaresh better pack his CEO bags, as can the anti-Steel Partners board members. Adaptec faces having a new CEO, probably an interim one, and a new board that will quite rapidly announce a new strategy aiming at getting Steel Partners a return on its Adaptec investment.

Stay tuned as the answers start rolling in on Sundaresh’s fate as well as that of the firm.

For more:

Steel Partners Press Release

Praise for BP's CEO

2009-10-28T10:04:00.000-04:00

Tony Hayward, the CEO of oil giant BP, deserves credit for BP’s latest performance. According to breakingviews.com in the New York Times,

The worst may be over for the major oil and gas companies, if BP is any sign. The oil giant’s profit almost halved in the third quarter from 2008. But the drop was less than investors feared and income rose from the preceding quarter. Tony Hayward, the chief executive, can take as much credit as the recovering oil price for BP’s performance.

Hayward took over the CEO post at BP back in May 2007 after BP’s CEO at the time, Lord Brown, resigned after a legal injunction was lifted that had prevented publication of details about his private life.

CEO Watch List - S. Sundaresh, Adaptec

2009-10-26T11:30:00.001-04:00

Adaptec’s ADPT (NASDAQ) CEO, S. Sundaresh, has come under increasing pressure. Adaptec creates hardware and software to manage, protect and store digital data. Last week on October 22, RiskMetrics Group and Proxy Governance Inc. pressed for the removal of Sundaresh as Adaptec’s CEO. The pressure ratcheded up today when Steel Partners, the activist hedge fund and large shareholder in the company, continued its push to get Adaptec shareholders to follow suit by signing what is known as the White consent card. Steel Partners put out a press release today over Business Wire that was included in a Reuters link. Adaptec continues to fight back to try and stop the Steel Partners push. Back on October 6, Adaptec put out its own release to counter the arguments being made by Steel Partners.

Keep a close eye on how this all plays out. Activist investors are beginning to raise their heads again.

Caterpillar Shows How Succession Planning is Done

2009-10-22T11:10:00.001-04:00

Caterpillar CAT (NYSE) today announced its CEO succession plan for the retirement of current CEO, James W. Owens. The company has picked an insider, Douglas R. Oberhelman, to succeed Owens. According to the firm’s press release,

The Board of Directors of Caterpillar Inc. (NYSE: CAT) elected Douglas R. Oberhelman to the offices of Vice Chairman and Chief Executive Officer – Elect, effective January 1, 2010. Oberhelman, 56,

currently serves as Group President of Caterpillar with responsibility for the company’s engine and gas turbine businesses, human services, rail services and remanufacturing divisions

…. Announcing the succession plan at this time allows Oberhelman to concentrate on aligning resources for the future and defining critical success factors for Caterpillar’s leadership going forward. He will serve as Vice Chairman and Chief Executive Officer – Elect until the June 2010 Caterpillar Board of Directors meeting, at which time he will be elected Chief Executive Officer and a member of the Board of Directors, succeeding James W. Owens, 63. Owens will continue to serve as Chairman of the Board and Chief Executive Officer until July 1, 2010. He will remain as Chairman of the Board through October 31, 2010, when he will retire in accordance with the company’s long-standing mandatory retirement policy and be succeeded by Oberhelman at that time…

Expect a relatively smooth transition going forward. More firms need to take heed and examine what Caterpillar has done on CEO succession.

Immersion corporation CEO Resigns and Leaves Immediately

2009-10-21T13:10:00.002-04:00

Immersion Corporation IMMR (NASDAQ) which develops hardware and software for simulating tactile experiences — such as the feel of an object or the jolt of an explosion during a video game — in order to enhance on-screen events saw its CEO, Clent Richardson, leave today. The company has been at risk of being delisted from NASDAQ. Just the other day NASDAQ,

granted an exception to Rule 5250(c)(1) of its listing standards to enable Immersion’s Common Stock to remain listed on NASDAQ while it completes its internal investigation and restatement of its historical financial statements.

Immersion has appointed former CEO, Victor Vegas as the interim CEO.

Keep an eye on the moves Viegas takes and who the board settles on to take the CEO position. There may be more here than meets the eye.

Poor Earnings - CEO change?

2009-10-20T14:02:00.001-04:00

Are we beginning to see some change in the top management environment? Throughout the current recession we have seen most public companies stay with their top management even as their firms continued to show weak results. Just lately, we have begun to see some companies that have fared poorly lately experience changes at the top. In my previous post, I examined the change at Nokia after poor performance. Now we have the announcement that Eric Claus the CEO of the Great Atlantic and Pacific Tea Company (known as A&P) GAP (NYSE) will be leaving his position immediately. Claus’ departure comes as the company’s performance continues to slide. While the change might not be considered a huge surprise it comes without a real successor ready to take Claus’ position. In the interim, A&P will be run by Executive Chairman and former CEO, Christian W.E. Haub. According to a story in the Wall Street Journal byKelly Nolan and Veronica Dagher,

Haub is also partner and co-CEO of Tengelmann Warenhandelsgesellschaft KG, A&P’s largest shareholder.

We may start to see more and more changes at the top of companies that fail to perform up to expectations.

For more:

Bloomberg

Marketwatch

APP.com

Poor Financial Results Usher in Quick Management Changes

2009-10-16T12:34:00.004-04:00

Nokia NOK (NYSE) the once indomitable Finnish based wireless phone company just announced some management changes. Nokia who has found itself with an uphill battle in today’s smartphone era is battling Apple and many of the others. So far, its results have been nothing to brag about. In a story hat appeared on Newsvine,

The company said Timo Ihamuotila, head of global sales, will replace Rick Simonson as the chief financial officer on Nov. 1. Simonson will head the mobile phones sector in the devices unit.

Simonson has been CFO since 2004 and will continue to be on the executive board, Chief Executive Officer Olli-Pekka Kallasvuo said.

“After six successful years as CFO, it is great to have Rick move to such an important operational role,” Kallasvuo said. “Rick Simonson’s deep knowledge of the business and its financials will be valuable
for the significant part mobile phones play in Nokia’s business.”

These changes are surely not the end of the problems facing the company.

For more:

CEO Watch Jeffrey Peek, CIT Update #2

2009-10-13T09:23:00.005-04:00

Back in July, I placed Jeffrey Peek, CEO of troubled business lender CIT, on the CEO Watch list. Early today news came out that Peek, Chairman and CEO, would resign his position at the end of the year. Too often these days top executive changes take place very late in the game. Let’s see if CIT can find a way out of its troubles and bring in a leader that can help its circumstances. According to a story by Alan Rappeport for the Financial Times,

Peek’s resignation comes a little more than a month after CIT extended his contract by another year, signaling that he would lead the company through its restructuring. In his new contract, which was set to expire in September 2010, Mr Peek was prohibited from any compensation not permitted under the terms of the government’s troubled asset relief programme and lost the privilege of using the corporate aircraft.

Hopefully more companies will take a cue from CIT’s troubles and set in place succession plans and at a minimum, make management decisions more quickly when the circumstances require changes.

For more:

Bloomberg

NPR

WSJ Deal Journal

Management Turnover as Change Agent

GM Update: It's official - Henderson out, Time Magazine's Alex Taylor III Explains Why

Not Official - Fritz Henderson, GM's CEO to Resign

Recommended Reading - Making Sense of Leadership, ReputationXchange.com

Recommended Reading - CEO Blandness Banned, ReputationXchange.com

Recommended Reading - CEO Swap, The $79 billion plan, Fortune

Marks and Spencer Hooks Big Fish for CEO

Recommended Reading - Why 'say on pay' won't work - Fortune

EMS Technologies Makes Change at the Top

Must Read - AIG's Benmosche Threatens to Jump Ship, Wall Street Journal

Suggested Reading - Subprime Leadership, ReputationXchange.com

Recommended Reading - BofA Could Take Cue From Ford, IBM, thestreet.com

CEO Watch List - S. Sundaresh, Adaptec Update #1

Recommended Reading - SEC Targets CEO Succession Plans - New Risks for Boards, Says Heidrick & Struggles

Praise for BP's CEO

Recommended Reading - Bank of America Bumps Into Hurdles in CEO Hunt, Wall Street Journal

CEO Watch List - S. Sundaresh, Adaptec

Recommended Reading - CEO Pensions Encourage Earnings Games, Business Week Management IQ

Caterpillar Shows How Succession Planning is Done

Immersion corporation CEO Resigns and Leaves Immediately

Recommended Reading- Steven Rattner: Why we had to get rid of GM's CEO, Fortune

Poor Earnings - CEO change?

Recommended Reading- Update Bank of America's CEO search, Fierce Finance

Poor Financial Results Usher in Quick Management Changes

CEO Watch Jeffrey Peek, CIT Update #2

Recommended Reading - Who can fill the CEO seat?, Boston Globe