Management Turnover as Change Agent

Monday, December 31, 2007

CEO Watch - Circuit City, Philip J. Schoonover

Circuit City's CC (NYSE) momentous decline over the last year and a half has come while its chief competitor, Best Buy has followed an opposite path. Each problematic announcement from the company over the last year should have been enough for the board to consider replacing Philip Schoonover as CEO. The most recent bad news has forced me to finally include Schoonover in my CEO Watch list. Schoonover became CEO at Circuit City back in June 2006 and has failed to do much positive for the firm since his appointment.

Stay tuned. The company needs a major shift in strategy and new blood if it ever is going to get itself going again and turn itself around.

For more:

24/7 Wall Street

Wednesday, December 26, 2007

Universal Stainless Appoints New President and CEO

Universal Stainless and Alloy Products, Inc. USAP (NASDAQ), the specialty steel manufacturer whose products are sold to rerollers, forgers, service centers, OEMs and wire redrawers, tapped Dennis A. Oates as the president and CEO of the company. Oates will replace founder and long-time CEO (1994) and chairman Clarence McAnich. McAnich will remain chairman. The appointment is a definite positive for the firm. Oates will officially take his positions on January 2.

Earlier in the year, Universal brought in Kenneth Matz as president. At the time, he was considered heir apparent to McAnich's CEO position once the head of the company decided to hand over the reins of the CEO position. Matz left the company recently to pursue other opportunities. According to the Pittsburgh Business Times,
Oates ... most recently served as vice president of the specialty alloys operation of Carpenter Technology, based in Wyomissing, Pa. He also served as president and CEO of TW Metals in Birmingham, Ala., and president and COO of Connell Limited Partnership, a privately held metals recycling and fabrication firm based in Boston.
In statement McAnich said,
Oates is "the right person to lead our company going forward."

"I have known Dennis for many years," McAninch said. "He is sharp, tough and highly knowledgeable about the global specialty steel business from both the manufacturing and distribution sides of our industry."
Oates appointment is a relief, it seemed to appear that McAnich might not have been willing to give up some of the reins which could have turned into a problem for the firm going forward.

Keep a close eye on Oates and what he does for Universal and whether or not McAnich really begins to give up the reins of running the company.

For more:

Forbes

Recommended Reading - Why the CFO’s first 100 days at work matter

Livemint.com a Wall Street Journal site summarized a recent survey and study conducted by McKinsey regarding the role new CFOs played during their first 100 days in office. The findings were worth examining. Financial Week's Matthew Quinn summarized the report as follows:
Newly appointed CFOs may not be spending enough time on crucial issues such as understanding the drivers of their business, working on corporate strategy and building their finance team in their first one hundred days...
Check it out.

Friday, December 21, 2007

Cisco Succession Planning Takes A Second Hit

Cisco Systems, Inc., CSCO (NASDAQ) the networking gear maker lost another top executive, Charles Giancarlo - the chief development officer, who had been rumored to be heir-apparent to John Chambers (CEO). He resigned to join the private equity firm Silver Lake Partners. Earlier in the year, another top level executive, Michelangelo Volpi, resigned. Volpi was the Senior Vice President and General Manager of the Routing and Service Provider Group and was also considered a potential successor to Chambers. He left and ultimately joined the Internet TV firm, Joost.

According to the U.K. Register, Giancarlo,
... told reporters in a conference call yesterday that Cisco's management restructure did not fit with his ambitions to be at the helm of a company.

In a story by Mark Boslet in the Mercury News further elaboration was provided about Giancarlo's decision.

Rumors about his (Giancarlo) possible departure began spreading nearly a month ago after Chambers told the board earlier this year he would remain for three to five more years.

Observers said differences in style between Giancarlo and Chambers may have discouraged him about his chances to lead the company. "Charlie and John are very different people," said Tom Nolle, president of market researcher CIMI of Voorhees, N.J. "Charlie is much more of an intellectual. John is the ultimate salesman - he's a showman."

For better or worse, Chambers has put in place a new management structure. Chambers said the new management structure would,
"transition from a company that is driven from command and control to one that is built on teamwork and collaboration." ... “I believe this type of structure will be the future, given the complexities and ... market adjacencies we’re going to move into.”
As Cisco continues to thrive, will the so called "new management structure" have an impact on the firm? Will things remain the same or will there be real changes and what will be the results?

Stay tuned.

For more:

GigaOm
The Houston Chronicle
TheStreet.com
Times Online
Reuters
Bloggingstocks

Thursday, December 20, 2007

Zale Jewelers Trys to Shine With New CEO

Zale Corporation ZLC (NYSE), the long troubled North American specialty jewelry retailer, announced the resignation of its current CEO, Betsy Burton along with the appointment of her replacement Neal Goldberg, who had previously served as President of the troubled children's retailer, The Children's Place Retail Stores. The management change comes in the wake of increased activist (hedge funds - Breeden Capital, Citadel LP, SAC all of whom made 13D filings) involvement in the company and a continuing decline in the company's performance despite a real change in corporate strategy.

Burton had only been CEO since February 2007 and served as acting CEO since February 2006. She has been on the company's board since 2003. Just as her replacement Neal Goldberg, Burton had an extensive retailing background. At the time she had been appointed as permanent CEO, Richard C. Marcus who was the Chairman of the Board said,
"Betsy has done a superb job running the Company since February. Under her leadership, we are moving forward with a customer-centric strategy that leverages our fundamental strengths to regain market share, improve profitability and create value for shareholders. Betsy is an experienced executive with an outstanding record of leadership and a deep knowledge of Zale. Along with the strong management team we have put in place in recent months, Zale now has the right leadership to realize our long-term growth potential."
Burton went on to shift the focus of the firm back to its more original retail strategy. According to the Dallas Morning News, Burton while interim CEO was quoted saying,
...the company believes the plan adopted by Leonard and former Zale CEO Mary Forte, who quit January 30, to market to higher-income customers and try to get product direct from foreign suppliers had not worked, and the company would go back to targeting average-income Americans.
Since Marcus's announcement on the appointment of Burton, a new Chairman, John B. Lowe Jr., has taken over and numerous management changes have occurred and yet, the company has continued to under-perform. In today's announcement, the new Chairman, John B. Lowe Jr., said Goldberg,
"has a unique combination of retail experience, leadership and team-building skills, and talent to move the company forward, building on the progress that has already been achieved."
Different Chairman same sentiments as when Burton was appointed. While Goldberg appears to have the right background and experience, he is coming from another retailer that recently has been under the gun (check the blog). The real question for me is what do the activist shareholders, who hold over 18% of the stock, plan to do? Zale has been floundering for a long time despite continuing efforts to turn itself around.

Stay tuned and make sure to watch both Goldberg and the outside activist investors (Breeden, Citadel and SAC).

For more see:

Reuters
Businessweek
Dallas Morning News
JCKonline.com
Diamond Intelligence Briefs
Houston Chronicle
Gerson Lehrman Group
Streetinsider.com 13D Tracker

Wednesday, December 19, 2007

New Ways To Avoid the CEO Watch List

Surprise, surprise, Wall Street CEOs have discovered a new tool to save their jobs or at least their reputation. Some of the CEOs who had the potential to be on my CEO Watch List have chosen to pass on bonuses. You did not read this wrong, they chose to pass. Here's a brief list: John Mack, Morgan Stanley and James Cayne, Bear Stearns, more can be expected.

Peter Cohan of BloggingStocks has a slightly different take on why the CEOs decided to forgo a bonus. Here is what he said,
Why are they doing this? Because it's going to make it easier for them to stiff lots of employees who they don't think will be essential to making a profit in 2008 and 2009. Investment banks have less bonus money to go around and they will try hard to pay enough to their top performers to keep them from jumping ship. If they can keep these top performers around, then they will be able to reap the rewards in the future. In the meantime, those no-bonus CEOs will need to make do with the hundreds of millions they've gotten in the last few years.
Whatever the reason, it is definitely a new approach.

For more:

NY Times (Update Dec. 21)
CNN Money (Update Dec. 21)
CNN Money
Investment News
Baynews9.com

Tuesday, December 18, 2007

Recommended Reading - More corporate execs concede to shareholder demands to avoid showdowns, possible ouster

According to a story by Matthew Scott in today's Financial News,
Companies are making more concessions to prevent shareholder proposals from getting onto proxy ballots, according to the latest corporate governance review by corporate governance consulting firm Georgeson.
Is the balance of power actually shifting away from top executives? Not likely, but there is somewhat of a slight shift. For the full study click here.

Recommended Reading - More Boards Seek Directors Who Aren't CEOs

Joann S. Lublin wrote a piece in yesterday's Wall Street Journal entitled, More Boards Seek Directors Who Aren't CEOs. In the story Lublin writes,
Non-CEO executives accounted for 29% of new independent directors on boards of Standard & Poor's 500 concerns, according to an analysis of recent proxy statements by recruiters SpencerStuart. That's up from 18% in 2001. (Both figures include some retirees.) Those ranks will keep growing, predicts Julie Daum, head of the search firm's U.S. board practice. Boards "are looking for different kinds of skills," she says.
For more on the story click here.

Correction - CEO Watch - AMD, Hector Ruiz

Apparently Hector Ruiz, CEO of AMD, did not get a raise as I indicated in an earlier blog on AMD. According to a piece in HotHardware today,
It turns out that a senior member of AMD's public relations staff erred when confirming Thursday afternoon--prior to publishing this report--that Hector was given a raise this week. The raise in question actually came last year, and the $1,046,358 in the proxy statement reflected that Hector spent part of 2006 making $950,000, and part of 2006 making $1,124,000. Hector's annual salary rate has changed slightly since then, but by just $24,000 or so to reflect a different accounting treatment of a car expense.
Raise or no raise he is still one of the highest if not highest paid semiconductor CEOs and what is AMD getting from him for such large pay? He remains on my CEO Watch List.

More:

Endgadget

CEO Watch - Sprint Nextel Update 3, New CEO Appointed

Sprint Nextel Corp S (NYSE) selected Embarq Corp EQ (NYSE) CEO Dan Hesse as its new president and chief executive. Hesse, 54, is somewhat familiar with Sprint. He worked at the company's local phone service division for a year before it was spun off to create Embarq. A number of analysts considered Hesse a potential candidate to replace Gary Forsee, who resigned as Sprint CEO in October. Forsee left the firm after the company bled customers for more than a year and lost market share to rivals.

Hesse's appointment seems to have been a safe choice. It's unclear whether safe is exactly what Sprint really needs at the moment. At least the waiting is over and the company can now start to move on to make the necessary decisions to try and get itself back on track. Hesse's appointment comes after it became known that Sprint rejected a $5 billion offer after it had been approached by former Sprint Chairman Tim Donahue, South Korea's SK Telecom Co Ltd and Providence Equity Partners.

Investors need to keep an extremely close eye on Hesse and his team as we move forward. Sprint remains in trouble and we will just have wait and see what the new management can do to reverse the firm's problems.

For more:

CNN Money
Red Herring
Bloomberg
Deal Journal
Barron's Tech Trader Online
ComputerWorld
Kansas City Business Journal
BusinessWeek
Kansas City Star
TheStreet.com
24/7 Wall Street
CNET
Endgadget

Monday, December 17, 2007

Recommended Reading - Succession Planning From Wharton

Knowledge@Wharton on November 27 published a superb article entitled, CEO Succession: Has Grooming Talent on the Inside Gone by the Wayside?
According to Wharton faculty members ... say, companies are increasingly looking to fill top spots with external candidates, while placing less emphasis on grooming employees to fill those roles.

... "The trend line from 1970 to 2000 shows a slow but steady increase in the number of companies that look to the outside in the case of a departing CEO," says Wharton management professor Michael Useem, director of the school's Center for Leadership and Change Management. "At the start of that period, one in seven new CEOs at major companies came from outside the firm; by the end, one in four."
The article breaks down into separate analyses of a different Wharton professors, who specialize in Leadership and Management. For the entire piece click here.

Recommended Reading - Interview with Cambell's Soup's CEO on Leadership

This morning on National Public Radio's Marketplace, Doug Conant, Cambell Soup's president and CEO, spoke with Kai Ryssdal about studying hard to stay on top of his game. The interview is short but worthwhile.

Friday, December 14, 2007

Recommended Reading - Looking For A Few Good CEOs

A December 13 blog from Portfolio.com focused on the problems related to finding effective CEOs. The story is based on an October study by the Society of Human Resource Management Foundation. The 79 page study is a worthwhile read for people immersed in these problems or you can read the summary.

CEO Watch - AMD, Hector Ruiz, Update 2

As AMD continues to decline while Intel's soars, AMD's board continues to keep its collective head in the sand. They recently agreed to raise Ruiz's compensation. Living in denial can only go on for so long. Even Ruiz himself admits AMD has failed in its contest with Intel. Ruiz was quoted in a recent analysts meeting where he stated,
"We blew it and we're very humbled by it and we learned from it and we're not going to do it again."
I continue to keep Ruiz on the top of my CEO Watch list. For more on Ruiz's latest compensation increase check out PC Advisor.

For more:

Ars Technica
Huffington Post
InfoWorld
CNET
TheStreet.com
EE Times
XBit Labs

Wednesday, December 12, 2007

Federal Signal's CEO To Resign

Early today Federal Signal FSS (NYSE), which makes fire trucks, safety gear and street cleaning vehicles, announced that its president and CEO, Richard Welding, will resign. The company named James Goodwin as interim President and CEO while the Company finds a successor. For some time now, the company has been under-performing.

Welding's resignation is a good sign for the company. He has had more than sufficient time to get the company moving in a really positive direction but nothing he has done has seemed to succeed. The real question is whether Federal Signal can find the right executive to take on the company's challenges.

Keep a close eye on who the company picks to succeed Welding and what the firm does in the interim period before a successor is chosen.

Update on The Gap

Back in July, The Gap GPS (NYSE) made a surprise CEO appointment. The company picked Glenn Murphy, a successful drugstore executive, as its new CEO. Prior to Murphy's appointment, The Gap was often being written off by many analysts and investors. It could be that Murphy may turn out to be a super appointment.

The Gap has managed to surprise many lately. According to a story today by Heather Burke for Bloomberg entitled, Gap First Holiday-Quarter Profit Gain Since '05 Signals Rebound, the company,
By refusing to join competitors making early-holiday markdowns, the biggest U.S. clothing retailer may post a fourth- quarter profit gain for the first time since 2005.
... After two years of declining sales, San Francisco-based Gap has cut inventory at its namesake brand to avoid having to slash prices on $98 cashmere sweaters and $148 tweed coats in what may be the slowest Christmas shopping season in five years.
The article points specifically to Gap's brand president, Marka Hansen, as the key behind the change but Murphy is close by. The article went on to point out,
Of 25 analysts who follow Gap, 12 recommend buying the shares, 11 say to hold them and two say to sell, according to data compiled by Bloomberg.
Keep a close eye on the steps The Gap follows to continue its potential comeback.

Tuesday, December 11, 2007

CEO Watch - Citigroup Update 2 - Pandit Gets the Nod

Vikram Pandit was appointed Citgroup's new CEO today. For details read Eric Dash's story in The New York Times piece. The bank also picked Winfried F. W. Bischoff, the acting chef executive, as chairman.

For more:

CNN Money (Fortune)
TimesOnline
Crain's New York
CNN Money
Washington Post
USA Today
BusinessWeek

Recommended Reading - ‘My position is not in jeopardy,’ UBS boss says after fresh hit

As the credit mess continues to take its pound of flesh, Marcel Ospel, the Chairman of UBS, the bank that just announced a $10 billion write down, insisted his position is not at risk. For more on his proclamation, read Christine Seib's piece in today's TimesOnline.

For more:

Financial Times

Double Eagle Petroleum Doubles Management Changes

Double Eagle Petroleum DBLE (NASDAQ), an oil and gas exploration company in the Rocky Mountains of Utah and Wyoming, is about to lose both its CEO and CFO.

Today the company announced its Board of Directors appointed Kurtis Hooley, the current director of business development and financial planning, to be its Chief Financial Officer. Prior to joining the company, Hooley served as the President of MKH Enterprises from 2003 to 2006. Hooley replaces Lonnie Brock, who on December 5, 2007 notified the company of his resignation in order to take a position with another company. Brock will remain at Double Eagle through December 31, 2007 and will assist in the transition to the new CFO. Five days after the Brock announcement, Stephen Hollis, the company's CEO since 1994 and a long-time employee of the firm, notified the company's Board of Directors that he desired to resign from his position as CEO and Chairman as of December 31, 2007. Hollis indicated he was willing to continue as an employee to provide advice and expertise concerning the Company's operations for at least an additional year through December 31, 2008. He will continue as a member of the Company's Board of Directors.

The company's press release stated,
Neither Mr. Brock nor Mr. Hollis resigned from their respective positions due to any disagreement with the Company, or because of any improprieties or any other matter relating to the Company's operations, policies or practices.
The Board appointed Richard Dole, who has been a director of Double Eagle since March 2005, as Chairman. As part of his responsibilities, Dole, on behalf of the Board, will coordinate company activities and management until a new CEO is selected.

The double loss in top management does not bode well for a company that has not displayed many positive financial aspects over the last few years. While the company recently had a favorable legal finding with regard to a lawsuit initiated by environmental organizations, the loss of its long time CEO and its CFO indicates there may not be great financial opportunities awaiting the company over the next few years.

Keep an eye on the interim management of the firm and the individual the company finds to replace Hollis as CEO.

For more:

CNN Money (more)
CNN Money
Trading Markets
Small Cap Investor

Friday, December 7, 2007

Recommended Reading - What are the challenges before new CEOs!

If you are about to be appointed a new CEO or you are interested in the challenges a new CEO must face when beginning his/her new position, check out Priyanka Sangani's piece in India's Economic Times. The piece is short but worth the read.

Thursday, December 6, 2007

Coca-Cola CEO To Step Down in 2008

In a surprise announcement, Neville Isdell will step down as CEO of Coca-Cola KO (NYSE) July 1. He will be succeeded by the company's president and chief operating officer, Muhtar Kent, 55. Isdell will remain as chairman until Coke's annual meeting in April 2009. Isdell has served as CEO since June 2004, a relatively short time frame for the soft drink manufacturer.

According to Harry Weber in an Associated Press story,

John Sicher, an industry expert and editor and publisher of Beverage Digest, said naming Kent as Isdell's successor is a positive move for Coca-Cola.

"He understands the company and the system literally as well as anybody in the world and better than most," Sicher said.

Sicher added, however, that business challenges lie ahead for Coca-Cola and Kent after Isdell steps down as CEO, particularly in the company's key North American market.

Muhtar Kent has been groomed as Isdell's successor. In a story by Mary Jane Credeur and Duane D. Stanford for Bloomberg when referring to Kent the reporters quoted Walter Gerasimowicz, chief executive officer of Meditron Asset Management, which has about 2.5 percent of its $1 billion in assets in Coca-Cola shares,
"He has a great deal of experience as a bottler and in the international markets, and that's very important to Coca-Cola.''
It appears Coca-Cola has shown the corporate world how to do a CEO succession. We will just have to wait and see how it all works out.

For more on the change see:

Fortune
Businessweek blog
Brandweek
Just-Drinks.com
MSNBC
International Herald Tribune
Guardian
Atlanta Journal Constitution
Portfolio.com
TheStreet.com
The Wall Street Journal
Financial Times

Wednesday, December 5, 2007

Recommended Reading - CEOs Who Should Go

Morgan House in a piece for The Motley Fool December 5 lists three CEOs that should go:

1. Angelo Mozilo, Countrywide Financial CFC (NYSE) already on my CEO Watch list.
2. James Tobin, Boston Scientific BSX (NYSE)
3. John Mackey, Whole Foods WFMI (NASDAQ)

For now, I would add Scott A. Edmonds, CEO of Chicos FAS CHS (NYSE). Chico's owns and operates specialty stores throughout the United States. The boutiques target middle-to-high-income women ages 25-40 with clothes made primarily from natural fabrics. The company's results have continued to perform poorly under Edmonds' leadership and now might be a good time to seek a change in leadership and strategic direction for the firm. In a story by Reuters
The company reported a 44 percent drop in third-quarter net profit on Tuesday and forecast weaker-than-expected results as sales continued to slump in November. The company's shares slid 8.7 percent in extended trading following the announcement, in which it also said it was scaling back its expansion plans for 2008.

"We are greatly disappointed with our performance to date," Chief Executive Scott Edmonds said in a statement. "Numerous challenges continue to affect the entire retail sector."

Third-quarter net profit fell to $23.6 million, or 13 cents per share, from $42.1 million, or 24 cents per share, a year earlier.
While retail has been under pressure, Edmonds has failed to demonstrate the leadership and the talent to right the company ship. Keep an eye on Chicos.

Tuesday, December 4, 2007

CEO Watch - Citigroup Update 1

If you think it is easy to fill the CEO position for one of the largest banks in the world, you may want to reconsider. The new CEO for Citigroup will have to sign off on the company's financial statement, something many of us might not be willing to do right now. According to a story in the Financial Times,
Josef Ackermann, chief executive of Deutsche Bank, has turned down an approach from Citigroup about taking charge of the US bank, underlining the lack of high-profile external candidates for the job.

Mr Ackermann was asked if he would be interested in becoming Citigroup’s chairman and chief executive following the resignation of Chuck Prince. He “was approached, but said he was not available”, according to someone familiar with the matter.
Who else out there has turned down the job? We will just have to wait and see. Many people continue to predict it will be current Citi employee Vikram Pandit. Stay tuned.

For more:

Dealbook
Forbes Blog
CNN Money

Friday, November 30, 2007

Sub-Prime Casualty Toll Claims Another

Zoe Cruz, commonly referred to as one of the most powerful women on Wall Street, appears to have been the latest casualty of the ongoing sub-prime credit crisis. After the market closed on Thursday, Morgan Stanley announced that Zoe Cruz, the co-President of Morgan Stanley, had resigned her position. According to a story by David Wighton in the Financial Times,
The ousting came three weeks after Morgan Stanley revealed it had lost more than $3.7bn on a subprime mortgage bet that went disastrously wrong.

... John Mack, Morgan Stanley’s chairman and chief executive, initially decided to take no action against Ms Cruz after discussing the matter with his board.

But after a longer “post-mortem”, he concluded that changes were needed, according to someone familiar with his thinking.

Sub-prime casualties keep climbing.

For more on the change:

Financial News Update (Dec 10)
Financial News
DealBook Update
Dealbook
Reuters
Forbes

CEO Watch - Edward Zander, Motorola, Update 1

Motorola early today announced that CEO Edward J. Zander would resign January 1 and be replaced by chief operating officer Greg Brown. Brown joined Motorola in 2003 and was promoted to COO and President in March. Zander has been under intense pressure for some time now. He was included on my CEO Watch back in October. Motorola has been struggling for a while and has successfully faced down activist shareholders (e.g., Carl Icahn) who have been demanding change at the firm. For a period of time, Zander surprised most experts who thought he would be forced out or lose control to Icahn. As the company has continued to see profits decline and lose market share to rivals, however, Zander's position became more and more tenuous. Zander will remain chairman until his term expires later next year.

Before working at Motorola, Brown worked at Ameritech and AT&T.

For more:

Deal Journal (Dec 6)
Bloomberg Update 5
BBC
PR Newswire (Carl Icahn)
Bloomberg
CNN Money
TheStreet.com

Thursday, November 29, 2007

CEO Watch - Hector Ruiz, AMD, Update 1

Nothing seems to have happened since I first put Hector Ruiz of AMD on my CEO Watch list. In a study just released by the market research firm iSuppli, AMD dropped out of the list of top 10 Chip-maker manufacturers list. The huge drop in standing is just another sad state of affairs for a company that not long ago appeared primed to give Intel a real run for its money. The drop in standing is just another negative notch in Ruiz's declining reputation.

According to the iSuppli study,
... numbers show AMD’s market share in the semiconductor industry will climb to 14.2% by the end of Q4, which is still below where AMD was last year. AMD rival Intel is currently sitting on a massive 78.8% of the semiconductor market according to iSupply. Analysts for iSupply are also predicting that Intel will generate $7.24 billion USD in revenue this quarter while AMD generates a comparatively paltry $1.3 billion USD in revenue.
Could this projection mean increased pressure for Ruiz's head?

Stay tuned.

For the study details click here

Advance Auto Parts' Six Month Search For CEO Ends

Advance Auto Parts AAP (NYSE), a retailer of automotive aftermarket parts, announced today that Darren R. Jackson would become president and chief executive, effective Jan. 7. Jackson, 43, replaces John C. Brouillard, who has held the roles since Michael N. Coppola resigned in May. I wrote a piece on Coppola's exit back in late May.

Jackson is a somewhat unusual choice, he was most recently an executive vice president at Best Buy Co. Inc., and has been on Advance Auto Parts' board since 2004. Jackson has both an operations and finance background along with an understanding of retail but he has never worked in the auto parts industry. We will just have to wait and see what he brings to the table as a chief executive.

For more on the appointment:

Forbes
Portfolio.com

Another CEO Bites The Credit Crisis Dust

E-Trade ETFC (NASDAQ) the embattled online brokerage firm appears to have found a savior. Citadel Investment Group will head a consortium that will give the firm a $2.5 billion cash infusion. At the same time, the company's well known CEO, Mitch Caplan has stepped down. President R. Jarrett Lilien was named acting CEO, while the firm searches for a permanent successor. The company also named Donald H. Layton, former vice chairman at J.P. Morgan Chase, to the post of chairman. Layton succeeds George A. Hayter, who will remain on E-Trade's board.

Caplan joins the inauspicious ranks of other top CEOs (Stanley O'Neal, Charles Prince, ) who have been ensnared in the sub-prime crisis. E-Trade was very heavily invested in sub-prime mortgages and its ultimate survival was jeopardized by the problem.

We can expect more high level turnovers as a direct result of the crisis.

For more on the resignation and Citadel's cash infusion:

Fortune Daily Briefing
Wall Street Journal (more)
NY Times
Businessweek
Bloomberg
Financial Times
Wall Street Journal
Reuters
Deal Journal
SeekingAlpha
Crains
MarketWatch
BloggingStocks
SeekingAlpha 2

Wednesday, November 28, 2007

What Happened To Stuart Scott ,The Fired CIO of Microsoft?

Earlier today I planned to write a short piece on the whereabouts of Stuart Scott, the former CIO of Microsoft, who was publicly terminated by Microsoft in early November. Rather than write a piece, I recommend you read the stories written by Meridith Levinson, the senior online editor of CIO magazine and a blogger herself. Here is the original press release from Microsoft announcing Scott's termination.

Meridith has continued to stay on top of the story.

Check Out Meridith's stories:

Some Recruiters Skeptical of Stuart Scott's New Job
Ousted Microsoft CIO Stuart Scott Scores COO Job at Mortgage Company
Microsoft Should Seek Internal Candidate to Replace Ousted CIO

CEO Watch - Citigroup's Search for New CEO, Update 5

Rumors continue to abound that current Secretary of Treasury, Hank Paulson and former head of Goldman Sachs, will be leaving the treasury post to head up Citigroup. Paulson who was a star at Goldman has failed to light any stars at Treasury might be an interesting choice. I am skeptical about the rumor but thought it was worth mention.

For more:

BloggingStocks
DealBook

Tuesday, November 27, 2007

Cosmetics President Resigns - Stock Drops

Monday, Bare Escentuals BARE (NASDAQ), a cosmetics company, announced the surprise resignation of Diane Miles, who served as president of the firm for nearly a year and a half. Miles was considered instrumental in the company's success over the year. The company listed Ms. Miles on their website:
Diane M. Miles has served as President of Bare Escentuals since May 2006. Prior to joining Bare Escentuals, Ms. Miles served in a variety of positions at LVMH Moët Hennessy Louis Vuitton, a manufacturer of luxury goods, from October 1990 until May 2006, most recently as the Chief Executive Officer of Benefit Cosmetics, a cosmetics division of LVMH, from October 2003 to May 2006. Under LVMH's Christian Dior apparel brand, she served as Senior Vice President of Marketing from 2000 to 2003 and Marketing Director from 1990 to 2000. Before LVMH, Ms. Miles started her beauty career with L'Oréal, and held several management positions for Lanc™me, Biotherm and Vichy, cosmetics/dermatology divisions of L'Oréal. Ms. Miles received an M.P.S. from the University of London.
The company's Monday announcement stated:

Diane Miles resigned "to pursue other opportunities effective immediately."

According to San Francisco's Business Times :

Jim Taschetta, the company's chief marketing officer, will supervise sales and marketing workers until a replacement for Miles is hired. The new person's job title will be senior vice president of wholesale sales.

Bare Escentuals' stock price was down at one point today nearly 14%. Miles was an instrumental component of the company's success and the market demonstrated its worries over whether the company could effectively replace her talents.

Keep a close eye on how Bare Escentuals handles this major management loss.

For more:

Forbes
Yahoo

Monday, November 26, 2007

Recommended Reading - More on the Need for Succession Planning - WSJ

Carol Hymowitz wrote a story in today's Wall Street Journal entitled, Too Many Companies Lack Succession Plans, Wasting Time Talent. The story is a worthwhile read particularly if you are interested in CEO turnover and its impact on a company.

Wednesday, November 21, 2007

CEO Watch - Rick Wagoner, GM Update 1

John Stoll of the Wall Street Journal had a story today indicating Rick Wagoner's honeymoon with Wall Street may be over.
The meltdown in the mortgage market and slumping car sales have combined to sour General Motors Corp. Chief Executive Rick Wagoner's brief honeymoon with Wall Street.
Stoll went on to say,
Mr. Wagoner, 54 years old, had earned high marks from many analysts and investors for reaching the new labor deal, which will allow GM to hand off billions of dollars in retiree health-care obligations to a union-run trust and reduce employees in its ailing North American operations. But GM's current problems, if they linger, could test that goodwill.
Stay tuned as the mortgage lending crisis continues wreak further problems. Will it result in Wagoner's head, only time will tell.

For more:

SeekingAlpha

Tuesday, November 20, 2007

The Count Continues - H and R Block CEO Out

The sub-prime crisis has taken another casualty. Mark Ernst the embattled CEO, Chairman and President of H and R Block HRB (NYSE), the nation's largest tax preparation firm, resigned today effective immediately. Ernst's resignation comes shortly after William Trubeck, the company's CFO resigned. The company appointed Richard Breeden chairman and Alan Bennett, who retired earlier this year as CFO of Aetna, as interim CEO. Bennett will serve until a permanent replacement can be found. He has said he does not wish to serve as a permanent CEO.

Despite H&R Block's primary business - tax preparation - over the years the company became involved in a number of other financial-related businesses, banking and sub-prime mortgage lending. As the sub-prime market began to sour, the company was put under increased pressure to rid itself of that business, handled under the auspices of Option One.

Pressure continued to grow over the last year for changes at the company when activist hedge fund investor and former head of the SEC, Richard Breeden, whose investment fund held a sizable stake in the company, pushed a proxy fight to change the board of directors and the company's strategic overall direction.

Ernst remained totally opposed to Breeden and pushed hard to fight his proposals. A Reuters piece back in July stated,
In the proxy filing, H and R Block also urged shareholders to disregard any proxy card from Breeden. His firm Breeden Capital Management LLC said it owns 1.86 percent of H and R Block shares.

Breeden ... nominated himself and two associates, Robert Gerard and L. Edward Shaw, to fill the three seats up for election on H&R Block's 11-person board.

He has cited disappointment with H and R Block's financial performance and management decisions to stray into areas outside tax preparation, including subprime mortgage lending.
In September, Breeden managed to get the upper hand. He and two allies, Robert Gerard and L. Edward Shaw were elected by shareholders to be H and R block directors. Breeden from the start had pushed the firm to do something about Option One.

Back in April H and R Block managed to work a deal with private equity firm Cerberus Capital Management to sell Option One for an estimated $800 million far less than the $1.3 billion Ernst originally claimed it was worth. The deal, however, fell apart as the US housing market went into a slump. The breakdown in the deal paved the way for Breeden and his allies to succeed and get on the board with the goal to change the direction of the firm. Even after the breakdown of the deal H and R Block has continued to work to salvage a part of the deal but so far there have not been any tangible results.

According to a piece by Jeffrey Cane in Portfolio.com Breeden stated the following today after Ernst resigned and he became Chairman,
"For more than 50 years H and R Block has successfully served the tax-related needs of millions of Americans and thousands of businesses, as well as helped clients meet their financial objectives. Our actions today reflect a determination to focus on those activities where H and R Block can generate significant shareholder value," Breeden said.
The real question remains can Breeden and Bennett find the right formula to solve H and R Block's problems. Stay tuned the firm is still in for a rough ride. One positive, Breeden's reputation is on the line and you can expect him to pull out all the stops.

For more:

Deal Journal (Update Dec 11)
Seeking Alpha (Update Dec 10)
BusinessWeek
Kansas City Star
Wall Street Journal
TheStreet.com
Bloomberg
CNN Money
Reuters
RTT Trading
Bloggingstocks

Recommended Reading - Don't Cry for Financial CEOs

David Weidner of MarketWatch wrote an inciteful column today entitled Hired or fired, Street CEOs give thanks. In the piece he wrote:
Guys like O'Neal and Prince, ousted amid the biggest credit write-downs to ever grace the industry, are leaving with exit packages averaging more than $100 million. They've also been retired, not fired, which means more perks and a little dignity, even if we know better.
The changes at the top are all happening while jobs are bleeding on Wall Street.
Conditions are so bad on Wall Street that, when it comes to cutting jobs, the financial industry is even beating the automakers.

Detroit cut 51,934 jobs through the end of October, compared to 140,442 job cuts in the financial industry during the same period. More than half of those -- 73,436 -- were announced in the past three months.
For those interested it's a quick read.

Thursday, November 15, 2007

Value Vision Update to CEO Change

On October 30 I wrote a piece on the CEO change at Value Vision VVTV (NASDAQ). Three weeks have past and a major shareholder in the firm in a 13D filing and a letter to management praised the recent management change but called for the sale of the company. In a story yesterday in MultiChannel News Mike Parrell wrote:
According to the filing, Soundpost Partners managing member Jamie Lester sent a letter to ValueVision chairman and interim CEO John Buck on Nov. 12 praising the company for its efforts to improve operations and reshuffle leadership. But Lester added more needed to be done. Soundpost owns about 2.8 million ValueVision shares, or about 7.5% of its outstanding stock.
As suggested on October 30th, keep a close eye on the company.

CEO Watch - Hector Ruiz, AMD

Hector Ruiz the CEO of AMD, the also ran chip manufacturer, was highlighted today in piece by Alexsei Oreskovic of TheStreet.com. As the company continues to languish in comparison to its main competitor Intel, Ruiz's position is beginning to look at risk. Here is some of what Oreskovic wrote:
With AMD's financial performance and share price slumping, talk of a management change is in the air.

Speculation has been heightened by recent events, including the exit of investor relations head Mike Hasse, and the September departure of sales chief Henri Richard.

Last week, President Dirk Meyer was appointed to the company's board.
All potential steps to a management shakeup at the very top. We will just have to stay tuned.

For more:

HotHardware
Daily Tech
CBR
24/7 wall Street
Bloomberg
Newsfactor

Wednesday, November 14, 2007

Recommended Reading - Why Merrill Chose Thain

Peter Cohan wrote a piece for Blogging Stocks this afternoon entitled Why Merrill went with Thain instead of Fink. If true, the story is very troubling, particularly for Merrill.

Recommended Reading - Boards on the Hotseat

Jeff Nash of Financial Week wrote a story November 12th entitled, Boards on the Hotseat. If you are interested in CEO changes or more specifically, succession planning it is a worthwhile read.

Merger Failure Forces CEO of Friends Provident Out

Philip Moore CEO of UK based life assurer Friends Provident FP (LSE) was forced to resign after the company's failed attempt to merge with Resolution PLC. Moore, who initially opposed the merger, ultimately became a supporter of the idea. Resolution broke off its 3.4 billion pound agreement to merge with Friends about a month ago after it received takeover bids from Pearl Group Ltd. and Standard Life Plc.

The failure to merge left Friends in a difficult position especially at atime when credit markets have been reeling. Shareholders, board members and many outside specialists all appeared to favor the proposed merger. In response to the failed merger and the pressure to force Moore to resign the company, pressure was apparent from shareholders as to exactly what Friends planned going forward.

The company announced that Sir Adrian Montague, chairman since 2005, would become the executive chairman until a successor for Moore is found and that he would work with Jim Smart, the current finance director on a strategic review of the company. The strategic review is more than likely another way of saying how the company would find someone else to merge with. Sir Adrian said,
“... this has been a challenging year for the group.” He said while the board remained confident about prospects, “it is right that we should take a hard look at the group’s strategy to ensure that we are delivering the highest value available to our shareholders. The board has concluded that this requires a change in the management team.”
"The board intends to update shareholders on the strategic review by the time of the fourth quarter new business results at the end of January."
According to a story by Simon Challis of Reuters analysts have indicated,
In a final twist to the story of the failed merger between Resolution and Friends, Mike Biggs or Clive Cowdery, respectively the chief executive and chairman of Resolution, could be candidates for the top job at Friends ...
The pair are likely to leave Resolution if a 4.9 billion-pound ($10.2 billion) all-cash takeover from arch-rival Pearl succeeds. "They might be interested in Friends, given that they've already seen the book," said Hariharan, (an analyst for Fox-Pitt Kelton).
There is a great deal happening here. The stock immediately responded in the positive to the news that Moore was leaving. Keep a close eye on industry moves and what specifically Friends does over the next few months.

For more:

Bloomberg
Times Online
Financial Times
Wall Street Journal
Reuters
Finance Markets

Tuesday, November 13, 2007

Unexpected Change at Cable Wireless

Cable and Wireless CW (LSE), the telecommunications firm that has changed so many times over the years one might think of the company as the seasons, announced the surprise departure of Harris Jones, chief executive of its international division. Jones' exit is expected by the end of the year. Cable and Wireless organized itself into two divisions last year, each with its own chief executive. One division was international businesses which Jones headed and the other was Europe/Asia and US operations, headed by John Pluthero.

Pluthero will assume management control of the international and the Europe/Asia and US divisions until a replacement is found for Jones. Jones departure comes after the company announced its latest earnings. The company's group chairman, Richard Lapthone
... denied the departure was acrimonious, saying the division just needed "a fresh pair of eyes".
While overall results were not bad, Jones' division performed far worse than that of Pluthero's. C&W cannot expect to really turn things around if it continues with the same management structure. It really needs to find a management formula that can get the company to perform. It is possible, as has often been rumored, parts of the company might be sold or de-merged but the powers that be continue to insist that is not their plan. According to a story in Exec UK,
It has been widely expected that the company will demerge the UK and international operations, but the group said this morning that it had no immediate plans to split the divisions into different companies.
I suggest you keep a close eye on what specifically Pluthero does over the next few months, who Cable Wireless ultimately hires or is considering to replace Jones and whether the company works to come up with a new management arrangement.

Stay tuned.

For more:

Financial Times
Times Online UK
Cable & Wireless Release
The Guardian
Financial Times
Hemscott
Newratings
BBC
Reuters

Monday, November 12, 2007

CEO Watch - Angelo Mozilo, Countrywide Financial Corp. Update 1

Angelo Mozilo, the CEO of embattled Countrywide Financial Corporation, continues to exude confidence about his company's prospects as well as his own to survive the turmoil in the mortgage business. His confidence seems to run in the face of reality. Since my initial CEO Watch on Mozilo, CTW an adviser to pension funds has added itself to the company's list of critics. CTW has begun to put pressure on Countrywide's board of directors particularly its chairman. In a recent Los Angeles Times article by Kathy M. Kristoff and E. Scott Reckard it was stated,
CtW Investment Group, which represents the pension funds for the Teamsters, United Farmworkers and other unions that hold Countrywide shares, also criticized the board for excessive compensation for its directors.
"Current and historic director pay is both unjustified and a likely source of the board's passivity in the face of the company's current crisis," CtW Executive Director William Patterson wrote in a letter to Harley Snyder, Countrywide's lead director.

The letter says Snyder bears "central responsibility for Countrywide's egregious compensation."

"Your excessive compensation, together with your aggressive divestment of your own Countrywide stock at the peak of the housing bubble, militates powerfully against any inclination you might have to lead your fellow independent directors or hold Mr. Mozilo accountable," Patterson wrote.
The likelihood of the credit crisis continuing will only result in increased pressure on both Mozilo and the board. Stay tuned and keep a close eye on moves surrounding the firm and its top executives.

For more:

SeekingAlpha
MarketWatch
Bloggingstocks
New York Times
Bloggingstocks
Footnoted.org

Friday, November 9, 2007

Recommended Reading - Corporate America Now Seeking Team Builder CEOs

According to an article by Nelson D. Schwartz in the November 9th International Herald Tribune, corporate America is now seeking CEOs focused on team building.
... management experts and longtime observers of corporate America say, the current environment demands, and is attracting, yet another kind of chief executive: the team-builder.

"It's someone who can assemble a team that functions as smoothly as a jazz sextet," said Warren Bennis, a professor of management at the University of Southern California.

The article goes on to indicate specific types of candidates from outside the financial industry who might be a good fit to fill CitiGroup and/or Merrill Lynch's recent vacancies at the top.

To find out more read the article.

Thursday, November 8, 2007

CEO Watch - Rick Wagoner, General Motors

Rick Wagoner CEO of General Motors GM (NYSE) has previously been slated by analysts and top investors a number of times as a sacrificial lamb for General Motors declining fortunes. He has to the surprise of many managed to survive despite these challenges. To his credit, lately many of his most vocal naysayers thought he might actually succeed in turning the company around. That was somewhat true until the latest report that GM reported the largest three month loss in the company's history. GM has been caught in the credit crisis as have many others particularly in the financial industries.

In an article by Chris Isidore of CNNMoney.com he stated,
(GM) reported an operating loss more than 11 times larger than expected and a $39 billion charge that was among the biggest profit hits ever reported.

The nation's No. 1 automaker, which was hit with a soft U.S. auto market and a two-day strike by the United Auto Workers union during the quarter, lost $1.6 billion, or $2.80 a share, excluding special items.

That compares to the forecast of a 25-cent-a-share loss from analysts surveyed by earnings tracker Thomson First Call and earnings per share of $497 million, or 88 cents, on that basis in the year-earlier period.

Among the problems hurting GM results was a $2.3 billion loss in the home loan business at GMAC due to problems from the meltdown in subprime mortgages. GM sold a majority of GMAC but still owns 49 percent of the lender.
It is difficult to imagine, even with the high-level of support Wagoner has managed to receive from his board that he will be able to ride these results out and remain in charge of GM.

Stay tuned this will be a continuing story.

For more:

BusinessWeek
LA Times
Financial Times
BBC
SmartMoney
BloggingStocks

Wednesday, November 7, 2007

Troubled Circuit City Loses Head Merchandiser

As Circuit City continues to follow an opposite path (declining) of its arch rival, Best Buy, it has found itself hit with another executive defection. Yesterday it was announced that David L. Mathews, executive vice president of merchandising, services and marketing was leaving his position to become president of Orchard Brands, a specialty retailer owned by private-equity firm Golden Gate Capital. The company has been reeling for some time now. In 2006 Philip Schoonover became the company's new CEO. Schoonover had previously served as Circuit City's chief merchandiser.

Schoonover has been attempting to right the ship, but so far has had little success. Over the last year the firm lost three top executive which now includes Mathews. Mathews' exit could not come at a worse time. The electronics retailer is gearing up for the Christmas selling season. Merchandising is key to success during the holiday season.

For more on the turnover see:

MSNBC
Wall Street Journal (sub. req.)

Recommended Reading - Even good CEOs can pick the wrong direction

Del Jones authored an article in USA Today yesterday on CEOs and how they manage. The article focuses on the obvious importance of judgment when evaluating CEOs.
Fresh research by top leadership gurus suggest that if great leaders have something in common, it could be this: a knack for escaping lapses of bad judgment. Or, at least the luck to do so. It may not even require an all-star's batting average in judgment. From Abraham Lincoln, our greatest leaders often have inconsistent judgment but, over long careers, find a way to be on the right side a few times when judgment is critical.
If you are interested in leadership and corporate management the article is worth a quick read.

Tuesday, November 6, 2007

CEO Watch - Ian McCarthy, Beazer Homes

Beazer Homes BZH (NYSE) CEO, Ian McCarthy has more problems than just an SEC investigation, declining profits and job cuts. CTW Investment Group, a shareholder advisory group, in a letter to the board has called for McCarthy's head.
With Beazer’s stock down nearly 80% this year and cancellations reaching a staggering 68% last quarter, decisive action by Beazer’s independent directors is required to restore investor, creditor, customer and regulatory confidence. Specifically, we call on you to immediately:

1. Replace CEO Ian J. McCarthy;
2. Name an independent board chairman; and
3. Establish a Legal and Regulatory Compliance Committee.

Rather than create sustainable, long-term value for shareholders, Mr. McCarthy has garnered egregious compensation while allowing his management team to violate federal law, improperly account for land development costs and sale-leaseback transactions, and provide undisclosed loans to executives.
Up to this point the company has not responded to the request. With the housing situation only expected to get more difficult, the company still reeling from financial related improprieties, suspension of the quarterly dividend and growing job losses, McCarthy will have a hard time saving his position.

Stay tuned as this situation heats up.

For more:

Forbes
CNN Money
CTW Investment Group Letter
Atlanta Business Chronicle
Schaefer's Research
Houston Chronicle
Financial Week

Recommended Reading - Succession Planning

Today's International Herald Tribune contains an article by Louise Story on the demise of succession planning for CEOs in the United States.

For years, the idea of grooming a successor was a job requirement of a chief executive and a priority for a company's board, who both wanted a smooth transition.

That is no longer the case. Corporate governance specialists say that succession plans at many companies are sparse, and directors are increasingly turning to outside candidates when a chief executive leaves suddenly or is dismissed.

... A result is that for a variety of reasons, several prominent corporations that typically promote chief executives from within have turned to the outside to fill their top spot in recent years, including Boeing, Chrysler, Con-Agra, Ford, Hewlett-Packard and 3M.
Take a look, it's worth a read. I don't completely agree, but it is true many more situations involve a turnover without an heir apparent waiting in the wings.


For more on the topic:

Newsday

Monday, November 5, 2007

CEO Watch - Richard Parsons, Time Warner Update 2

It's official, Time Warner TWX (NYSE) announced that its Board of Directors has elected Jeffrey L. Bewkes as Chief Executive Officer of Time Warner Inc., effective January 1, 2008. Bewkes currently President and Chief Operating Officer will retain the title of President. Bewkes will succeed Richard D. Parsons as CEO, and Mr. Parsons will remain as Chairman of the Board.

There may be real changes ahead for Time Warner. Stay tuned

For more:

Time Warner Release
LA Times
Times Online UK
Marketwatch
The Register
CNBC

CEO Watch - Richard Parsons, Time Warner Update 1

Reuters today reported that according to a report by CNBC, Richard Parsons will step down as CEO of Time Warner. The report claims Parsons will step down as CEO but remain as Chairman. Jeffrey Bewkes, the chief operating officer would become Parsons' replacement as CEO on January 1, 2008.

We can expect a lot more on this shortly.

For more:

paidcontent.org
CNBC
Wall Street Journal

Recommended Reading - Forbes, Wanted CEO of major corporation

In light of the recent two major CEO changes (Merrill and Citigroup) Geoff Colvin of Forbes wrote an interesting piece on CEO succession planning. Obviously, the article was written after both aforementioned companies failed to have a succession plan in place. Take a look.

Sunday, November 4, 2007

CEO Watch - Charles Prince, Citigroup

The die has been cast, Prince has resigned as CEO and Chairman of Citigroup. In his place, Former Secretary of the Treasury, Robert Rubin and current Citi board member has been made chairman. Sir Win Bischoff, chairman of Citi Europe and a Member of the Citi management and operating committees, was made interim CEO. Bischoff will remain interim CEO until a successor is found.

On top of the management changes Citigroup said it would take an additional $8 billion to $11 billion in write-downs related to mortgage-related securities. Hopefully, no more shoes will drop. Citi insists it will not reduce its dividend as was suggested by some analysts late last week.

Monday should help sort out exactly what is next with more updates on the changes and how Citi plans to deal with the situation in the short-term.

Stay tuned.

For more:

Citigroup Press Release
Deal Book
Independent UK
Australian Business (WSJ)
Bloomberg
Crains
MarketWatch

Friday, November 2, 2007

CEO Watch - Charles Prince, Citigroup Update 4

Prince's time may finally be up.

As Citi's stock continues to slide and calls for Prince's head have grown the end seems near. Charles Prince, Citigroup Inc.'s CEO, will offer to resign Sunday, according to sources cited in a Wall Street Journal report.


For more:

Telegraph UK
Reuters
Wall Street Journal
CNN
Bloomberg
AP
AFP
Reuters

Multiple Management Defections From Toyota North America

Liberum Research often monitors multiple management changes at companies. We rely on this technique as one of many methods investors can use as a way to evaluate a firm as a potential investment opportunity (positive or negative) as it relates to management change. Today's International Herald Tribune for example, focused on recent senior executives that have left Toyota's North American division for rivals in the United States.

Toyota, as everyone is aware, has been giving American and its Japanese competitors constant pressure as the firm continues to move to new heights. The major defections could have an impact ultimately on Toyota's North American operations. In the story the writer, Yuri Kageyama states,
In just the last three months, three senior executives in Toyota's North American business abruptly left for rivals. The high-profile defections underline a new danger looming for the Japanese automaker - the lure of U.S. companies wooing the best in its ranks.

The executive exodus signals the overseas growing pains at Toyota Motor. It now sells three-quarters of its vehicles outside Japan and runs more than 50 manufacturing plants abroad, including five vehicle-assembly plants in the United States.
Always keep an eye on multiple management changes at companies, even when those changes are below the top C-level executives. Such changes may be an indicator of something going on at the firm.

Thursday, November 1, 2007

CEO Watch - Charles Prince, Citigroup Update 3

Can Prince continue to hold on to his position in spite of continuing bad news impacting the firm? Rumors were flying through the markets today that Citi might need $30 billion in short term loans. The rumors hurt the market and continue to put unending pressure on Citi.

Can Prince really withstand the pressure and will the board continue to back him?

For more:

Deal Journal
Times Online UK
Seeking Alpha
FT

Wednesday, October 31, 2007

Recommended Reading - Why Boards Pick the Wrong CEOs

BusinessWeek highlighted a Harvard Business Online article by Jay W. Lorsch and Rakesh Khurana entitled, Changing Leaders: The Board's Role in CEO Succession - Why boards pick the wrong CEOs. The timing could not be any better for such a piece. As high-profile CEOs face the ax companies (particularly their boards) need to be better prepared to find the right replacements to get their companies back on track. Both the edited and full version of the recommended article are worth a read.

CEO Watch - Patricia Russo, Lucent-Alcatel Update 1

Back in late September I placed Patricia Russo, CEO for Lucent-Alcatel on my CEO Watch list. After three straight quarters of declining results, Russo was forced to develop a one-month emergency plan, which she did. At today's meeting the company announced its restructuring plan. The company announced that CFO, Jean Pascal Beaufort will be stepping down to "pursue other opportunities" and will be replaced by Hubert de Pesquidoux, the current head of the enterprise division. The company announced it would cut an additional 4,000 jobs. It remains to be seen whether the changes will enough for Russo to stay.

Keep a close eye on Russo, the board and outside major shareholders as we go forward.

For more:

Bloomberg
BusinessWeek
PC World
BloggingStocks
Financial Times
BBC
Forbes
International Herald Tribune
MarketWatch
TheStreet

What Private Equity Looks For When Hiring A CEO

Check out Tennille Tracy's post on today's WSJ's Deal Journal. Tracy gets advice from a private equity player on what they look for when hiring a CEO. The piece was developed in light of Stanley O'Neal's resignation as CEO of Merrill and the fact that Merrill made Alberto Cribiore, a private equity veteran, Merrill's acting CEO. Criobiore is expected to play a key role in the CEO search and hiring process. Check it out.

For more:

Business Week Management IQ
New York Times

Tuesday, October 30, 2007

Shopping Channel ValueVision Ousts CEO

Value Vision Media VVTV (NASDAQ) which operates the 24 hour shopping channel ShopNBC last Friday ousted CEO and board member William J. Lansing. At the same time the company lowered the company's fiscal 2007 outlook. Lansing had been CEO of the firm since December 2003. The company named Chairman John Buck as interim CEO, effective immediately.

Value Vision has been struggling from inception. According to a story by Leslie Brooks Suzukamo for Pioneer Press,
Under Lansing, sales grew from $591 million in fiscal 2004 to $767 million in 2006 but lost money every year. Nearly all the company's revenue comes from its television and associated Web site shopping business, with jewelry the biggest category.
Back in May of this year, the company reduced its workforce about 14 percent after posting an operating loss of $7.4 million in its first quarter. The company also closed two outlet stores and consolidated its distribution operations into a single warehouse facility. The cuts failed to stop the decline. In August, the company reported its second quarter loss increased to $5.5 million. Shortly thereafter,
Lansing promised Wall Street he could drive up yearly sales to 6 to 8 percent.
It was not to be. Two months later the company's board felt compelled to act forcing Lansing to leave. Lansing, outside of institutional holders such as GE Asset Management (17.34%) and others is one of the largest individual holders of the company's shares (377,000 according to Reuters). Before Lansing was ousted, the company hired turnaround consultants Alvarez & Marsal to help the board develop ways to improve corporate performance. At the time, the board specifically went out of its way to emphasize the hiring of Alvarez and Marsal was not a turnaround situation. The company supposedly had a healthy balance sheet with $100 million in cash and no debt.

Keep a close eye on the moves the company makes over the next few months. If they manage to hire a very strong candidate with turnaround abilities and a thorough understanding of their specific business model there may be some real potential upside. As things stand, that might be a tall order.

Stay tuned.

For more:

Reuters

CEO Watch - Stanley O'Neal, Merrill Lynch Update 3

It's official, Stanley O'Neal has retired from Merrill. According to this morning's press release from the firm,
Stan O'Neal, chairman and chief executive officer of Merrill Lynch & Co., Inc. (NYSE: MER), has decided to retire from the company effective immediately, the company announced today. Mr. O'Neal has been chief executive officer of the company since December 2002 and joined the company 21 years ago. The company said the board of directors has elected Alberto Cribiore as interim non-executive chairman.

Merrill Lynch said Mr. Cribiore, who has been a member of the Merrill Lynch board since 2003, also will chair a search committee that will identify and evaluate chief executive candidates from within and outside of the company. Mr. Cribiore is managing partner and founder of Brera Capital, a global private equity firm, and former president of private equity firm Clayton Dubilier & Rice.
In what might be viewed as a bit of a surprise, Cribiore said that Ahmass Fakahany and Gregory Fleming would continue as co-presidents and chief operating officers. Fleming is considered one of the possible successors to O'Neal but Fakahany has been directly linked with O'Neal and the risk problems Merrill has been facing. It has been surmised by some that Fakahany could be next.
Mr. Cribiore said that Ahmass Fakahany and Gregory Fleming will continue as Merrill Lynch co-presidents and chief operating officers. He further noted that Mr. Fakahany will lead the company's global support, finance and human resources functions and that Mr. Fleming will lead the integrated businesses of Merrill Lynch & Co., including risk management.
We just have to wait to see how this really plays out over the next few weeks and months.

For more:

BrightCove TV
New York Times
Financial News
TimesOnline UK
Bloomberg
Market Watch
Yahoo
TheStreet
International Herald Tribune
Washington Post
LA Times