Management Turnover as Change Agent

Friday, August 31, 2007

Minnesota Retailer Brings in New Talent to Right the Ship

Christopher and Banks Corporation CBK (NYSE), a moderately priced private label women's apparel retailer, following a year of a declining stock price and weak earnings announced the resignation of CEO Matthew Dillon. At the same time, the company announced his replacement, Lorna Nagler. Nagler, until late June of this year, was president of women's plus-size apparel retailer Lane Bryant. Nagler was also previously president of Catherine Stores, a division of Charming Shoppes and prior to that was senior vice president and general manager for apparel and jewelry at K Mart. In addition to the recent CEO change there have also been other negative indicators regarding the company. The CFO of Christopher & Banks, according to an SEC filing, recently sold $668,400 in stock or 40,000 shares at an average price of $16.71. Moller's transaction was the first insider transaction at the firm since he sold $434,000 worth of shares back in January, at an average price $20.60. The above facts indicate that Nagler is faced with a terrific challenge. The CFO does not appear to place great confidence in the company's performance.

At the time of the latest announcement the company's chairman, Larry Barenbaum, said,
"We are excited to welcome Lorna Nagler as CEO of Christopher and Banks. Her experience in the women's specialty retailing industry and talent as a leader capable of building effective teams make her an outstanding choice to lead our Company as CEO. The Board of Directors shares my confidence in Lorna's ability to lead Christopher & Banks in today's retailing environment."
Nagler will have a chance to work with a former associate at Lane Bryant. Back in June, Christopher and Banks hired Susan Connell as executive vice president and chief merchandise officer. Connell was hired to oversee sourcing, product development and other merchandising concepts for the company. Prior to being hired at Christopher and Banks, Connell was the senior vice president and general merchandising manager at Lane Bryant the same company Nagel came from. Hopefully, the two executives will be able to develop the right formula to turn the company around.

Keep a close eye on Nagel to see what she plans to do with the company. She has a difficult challenge ahead of her.

Wednesday, August 29, 2007

Rumor: Yahoo To Get New Sales Chief

According to a Rumormonger piece in today's ValleyWag, Gregory Coleman, long time head of sales at Yahoo, is soon to be out. Valley Wag goes on to say, he will be replaced by Hilary Schneider, who currently runs Yahoo's e-commerce businesses. Schneider is an ally of Yahoo president Sue Decker.

For more see:

NY Times (registration req.)
WebPro News

Monday, August 27, 2007

Stein Mart Shifts Gears

Stein Mart Inc. SMRT (OTB), the discount retail department store, announced that the company's CEO and president, Michael B. Fisher has resigned effective immediately. The company did not provide any explanation for Fisher's resignation. Fisher served as CEO and President since 2003 and was with the firm for 14 years. In Fisher's place, the board announced the appointment of Linda McFarland Farthing, a board member since 1999 and a member of the board's audit committee since 2003. Farthing will take her position on or about September 24th. Farthing's appointment does not appear to be a slam dunk choice. While well-qualified, she has not recently managed a large retail business and while quite familiar with Stein Mart, one has to wonder what new approach she might bring to the table to get the operation humming.

According to the board,
She has an extensive retail leadership background, most notably as president, chief operating officer and director of the Cato Corporation from 1990 - 1997 and president, chief operating officer and director of Friedman's Inc. in 1998. Prior to those roles, she was senior vie president and general merchandising manager for the J.B. Ivey Company, a Charlotte, NC-based regional department store chain, for 11 years.
The Board also announced the election of two new members to the board of directors. The change in top management comes after two quarters of uninspiring performance. Most recently the company reported a disappointing second quarter with earnings and sales both down and has lowered its third quarter outlook.

We will just have to wait and see what changes, if any, Farthing puts in place, once she takes charge.

Thursday, August 23, 2007

AMD Key Turnover's Raise Risks

AMD AMD (NYSE) has experienced a number of key turnovers lately that place increased pressure on the firm. On Wednesday the company announced that Henri Richard, head of the company's sales and marketing, will step down from his post in September. Richard came to AMD in 2002 after working at WebGain, a Java software company. Prior to Webgain he worked at Bell Microproducts and IBM. His decision to leave and "... move to a different business segment," comes at a very difficult time for AMD. They are about to launch their long delayed Barcelona chip. AMD hopes the new chip will put them back in the game again after a very difficult year. On top of Richard's decision to leave, last month the company lost Dave Orton, the head of the company's graphics business. Orton left after AMD acquired ATI Technologies.

Both men were an integral part of the company's management team. Richard was particularly important to the company. He was often the public face of the firm's sales operation and was considered an integral part of the company's success over the last few years. Keep an eye on how AMD replaces Richard and what they intend to do to stay in the game.

For more on the changes see:


IT News
Addict 3D

Tuesday, August 21, 2007

Delta Board Trumps Outgoing CEO's Choice For Successor

Earlier today Delta Airlines DAL (NYSE) announced that former Northwest Airlines CEO and recently appointed Delta board member, Richard Anderson will be the CEO of the airlines. Current CEO, Gerald Grinstein, who successfully sheparded the firm out of bankruptcy previously announced his intention to resign as CEO. At the time, Grinstein made it clear he hoped his successor would be from within the firm rather than an outsider. Most analysts thought his choice was for finance chief Ed Bastian. As part of the announcement, Delta promoted Bastian to President and Chief Financial Officer.

In the announcement the board stated,
“After a thorough search, the Board concluded that Richard Anderson possesses the right blend of seasoned leadership, strategic skills, international experience and airline knowledge the company needs to navigate the industry’s challenges and capitalize on its opportunities,” said Daniel A. Carp, chairman of Delta’s Board of Directors. “Well-qualified with a proven track record in this highly competitive industry, Richard has a demonstrated ability to master the competitive pressures of today’s marketplace with innovation and an unwavering focus on the customer. He brings complementary strengths to Delta’s highly talented leadership team and high admiration for the people of Delta and their recent success in restructuring to become a fiercely competitive airline.”
I tend to agree with the board on their choice. Now is the right time to bring in someone with extensive top-level executive experience in the airline industry to continue Delta's re-emergence.

Stay tuned. Anderson takes the reins on September 1.

For more on the new appointment see:

Atlanta Journal Constitution
Business Journal
Wall Street Journal (subscription req.)

Monday, August 20, 2007

Activist Investor Triumphs Again

Activist hedge fund investor Dan Loeb of Third Point LLC finally got his man at PDL BioPharma LLC PDLI (NASDAQ). Going back to March of this year, Loeb's fund began increasing its ownership share of the firm. Upon increasing his ownership share he began pressing initially for a sale of the company. When a potential sale failed to materialize, Loeb began pressing for the CEO, Mark McDade's head. Loeb, the largest shareholder in PDL BioPharma, pressed very hard for big changes.

According to an Associated Press article in today's Forbes,
Third Point blamed McDade for failing to close a potential deal with a large pharmaceutical company and for the company missing earnings and sales projections. Third Point has also alleged ethical breaches in the promotion process. Third Point attempted to elect four directors to PDL BioPharma's board, but the move was rejected. It called for the ouster of McDade after its choices for the board were denied.
Loeb over the last number of months continued to apply pressure. The company ultimately initiated an internal investigation into the alleged ethical breaches. Today the company announced,
"... that a three-month internal investigation of the company's chief executive officer (CEO), Mark McDade, found no credible evidence of improper personal conduct or breach of fiduciary duty by McDade to corroborate the various allegations investigated. The company also announced that McDade, following the investigation and due to the personal toll created by the unsubstantiated rumors and related investigation, has decided to step down as CEO and a member of the board by the end of 2007."
It is possible the company might go on the block again. Time will tell. Stay tuned.

For more on the change see:

Seeking Alpha (8/29/07) more info
San Francisco Chronicle
StreetInsider 13D Tracker
MSN Money

Monday, August 13, 2007

On Vacation Back Soon

Spending a few quiet days on vacation. No thoughts of CEOs or management changes. Still thinking about the new CEO at Qwest will deal with the change next week.

Please stay tuned

Wednesday, August 8, 2007

Good Succession Planning - Kaman Corporation

Kaman Corporation KAMN (NASDAQ) a manufacturer of aerospace equipment and components, including helicopters, and musical instruments announced Tuesday that Neal J. Keating, a former building supply executive with extensive aerospace experience, will be its next president and chief executive. Keating, 51, will succeed Paul R. Kuhn, assuming the titles of president and chief operating officer in September and that of CEO on or before January 1, 2008 according to the company's announcement.

Kuhn the current CEO who replaced the founder, Charles Kamer, joined Kaman in 1999 and announced his retirement plans over a year ago. Since the announcement, Kaman has undergone an extensive search for his replacement.

Kaman's approach to CEO succession has been nearly textbook perfect. The company has not rushed and has looked hard and long to find the right candidate. During the search process the company has continued to prosper. In its latest quarterly earnings, Kaman announced a growth of 70% from the same period last year due primarily to strong performance in its aerospace division. Keating's selection seems to be a very good fit and the method for succession should work smoothly as planned.

Keating has all the right credentials and experience to step right into the position. According to Kuhn,
"Neal comes to Kaman with a remarkable depth of successful experience in both the aerospace and industrial distribution industries."....."He is a results-oriented executive with a reputation for leadership and strong customer orientation. I believe he is ideal for the the task of sustaining the momentum we have achieved and leading this company forward."
Keating joined Hughes Supply as Chief Operating Officer in February 2005. Prior to his position at Hughes he served as an Executive Director of GKN, Plc and Chief Executive Officer for GKN Aerospace. Prior to GKN, Plc he worked at Rockwell International for 24 years. During that period, he rose to executive vice president and chief operating officer of Rockwell Collins Commercial Systems. He holds a bachelor's degree in electrical engineering from the University of Illinois and an executive M.B.A. from the University of Chicago.

Kaman is an example of how a new CEO can be selected. Watch the continuing succession process and how the company continues to perform.

For more on the change see:

Hartford Courant

Tuesday, August 7, 2007

Six-month CEO Search at Tecumseh - Worth the Wait?

Tecumseh Products Company TECUA (NASDAQ) recently hired a new CEO, Edwin L. Buker 54, who comes from privately owned Citation Corporation of Birmingham, Alabama. Buker's selection comes approximately six months after former chairman and CEO Todd Herrick was ousted by the board. Subsequently, there was litigation over the board's move to push Herrick out as CEO and chairman. Ultimately, a legal arrangement was devised which would then lead to some role for Herrrick after input was made by the newly selected CEO. Buker's appointment at first glance, appears to be a good choice. After reviewing his work with Citation, however, I am somewhat more skeptical.

Buker was originally appointed the CEO of Citation, a maker of cast and machined metal components for the automobile industry, back in March of 2002. Prior to joining Citation, Buker had been vice president and general manager of the Chassis Systems division at Visteon Automotive; president, Electrical Systems -The Americas, for United Technologies Automotive; and vice president of New Model Development for BMW Manufacturing Corp. During his time as CEO with Citation, the company filed for bankruptcy two different times. Once in 2004 and more recently in March of 2007.
Under his tutelage, the company did succeed in emerging from bankruptcy, first in 2005 and then under the most recent filing, emerged in less than a month. While the automotive parts industry had been under intense pressure during this same period of time, I am not certain Buker is the best candidate for Tecumseh. He does have all the necessary industry qualifications and skills but two separate bankruptcy filings don't build the necessary confidence for his selection.

Monday, August 6, 2007

More on Motorola & Zander's Troubles

A recent piece by Dow Jones that appeared on dealt with the dearth of telecom executives capable of taking charge of large telecom related firms, particularly Motorola and Sprint. The writer interviewed Liberum to get its take on the situation.

Bob Nardelli to Head Cerberus Capital's Chrysler?

I did not plan to write anything about the appointment of Bob Nardelli to run Chrysler but after reading Peter Cohan's piece in Bloggingstocks and Alex Taylor's piece on CNN Money, I must concur with their assessment. Take a look, I hope I am wrong.

Also check out:

L.A. Times (8/7/07) interesting take
Hartford Courant
CNN Money (different take)

Friday, August 3, 2007

Lydall Brings in New CEO From Outside

Lydall LDL (NYSE), a manufacturer of thermal and acoustical barriers, automotive heat shields, and insulation products used by the auto industry and in industrial kilns and furnaces announced the impending retirement of its CEO David Freeman and his replacement, Dale Bernhart. Freeman who has been CEO since 2003 and a board member since 1998 plans to retire in October after a transition period.

According to today's anouncement,
Barnhart (age 55) comes to Lydall from Synventive Molding Solutions where he has served as Chief Executive Officer since 2004. Synventive is a provider of hot runner systems, machine nozzles, temperature controllers and sprue bushings for the injection molding industry. The company, with operations in the United States, Europe, and China, supplies the automotive, electronics, and cellular communications industries, among others. He and his team developed a business plan focused on products strategy, Asian expansion, and lean implementation and grew the business by 16 percent in two years and nearly doubled EBITDA in one year. Previous to Synventive Molding Solutions, Barnhart spent some time as a consultant working with two private equity groups. From 2000 to 2003, he was President of Invensys Climate Control with responsibility for a $1.2 billion global business unit providing products and services to the heating, ventilating and air conditioning and commercial refrigeration markets. Previous to that, Barnhart held various senior management positions at Ranco North America, WolverineTube, Emerson Electric (Copeland Corporation), and BF Goodrich. Barnhart holds ME and BS degrees in electrical engineering from the University of Louisville in Louisville, Kentucky.
The key to Barnhart's background was his experience as president of Invensys, a similar company to Lydall, where he had responsibility for over 8,500 employees and his work with private equity firms. Also his most recent position as CEO of Synventive gave him direct expertise as it related to the automotive industry, a real plus for his new position. His appointment comes shortly after Lydall announced mediocre financial results for the last quarter.

Barnhart appears to be a good choice who should be capable of coming up to speed quickly in his new position and capable of developing new ideas for running the business.

For more on the management change see:


Thursday, August 2, 2007

Trading Pharmaceutical Chairs

Earlier today Barr Pharmaceuticals BRI (NYSE) announced that Paul M. Bisaro, President and Chief Operating Officer resigned to take the president and chief executive position at its competitor Watson Pharmaceuticals Inc. WPI (NYSE). Bisaro has been with Barr since 1992. In 1999 he was made president and chief operating officer. Bisaro will join Watson in early September at which time he will replace the current ceo and president Allen Chao. Chao will remain chairman and Bisaro will join the company's board.

In its announcement, Barr's chairman and CEO Bruce Downey stated,
"We regret that Paul has accepted a position with Watson Pharmaceuticals," ....... He went on to say, "I can understand his desire to assume a position of higher visibility and responsibility, and I wish him well."
Watson has been showing some mixed signals to the market lately. In is latest release of second quarter results the company beat forecasts but overall sales were a bit lower than the consensus of analysts predictions. Bisaro may be just the right medicine for Watson. He has been waiting for some time to get the chance to lead and Watson is a perfect opportunity for him and the right kind of company. He is well versed in the industry. He was considered a key player in Barr's recent efforts to assimilate Pliva into its business. Pliva, the Croatian drug company, was acquired by Barr. He also has a legal and financial background which has been successfully combined with operational skills.

Stay tuned to his moves over the next few months.

For more see:

MSN Money

TV Appearance on Business News Network

FYI: Thursday Morning at 10:35 am, I was interviewed on Canada's Business News Network. The interview entitled Fresh Blood at the Top can be viewed for a week on