Management Turnover as Change Agent

Friday, September 28, 2007

CEO - Watch -- Patricia Russo, Alcatel-Lucent

Rumors continue that Patricia Russo, CEO of telecommunications firm Alcatel-Lucent ALU (NYSE) is under pressure to present a restructuring plan or may be on her way out.

For more see:

Financial Times
Barron's Blog
Wall Street Journal
Trading Markets

Thursday, September 27, 2007

Pay For Performance Innovator Still A Believer

As CEO pay continues to be a hot topic, one of the original innovators in this concept, Michael Jensen, a professor emeritus at the Harvard Graduate School of Business remains a true believer. In an article by Louis Uchitelle in the International Herald Tribune he discusses Dr. Jensen's thoughts on the concept and how he thinks it can be fixed. Take a look if you are interested in CEO pay.

Wednesday, September 26, 2007

Food For Thought On Long Serving CEOs

According to a September 26 piece by Dennis Berman on The Wall Street Journal's Deal Journal,
the fifth year of a CEO’s tenure is his most tumultuous, and the one where he is most likely to do a deal, according to a fresh study of CEO behavior conducted by two Harvard Law School professors.
The professors John C. Coates IV and Reinier Kraakman crunched numbers on CEO tenure at S&P 500 companies from 1992 through 2004, representing a total of 6,449 analyzed years. They found that during the first four years of a CEO’s stay, the turnover is very low.

Once the fifth year hits, all kinds of weird things start to happen. The number of mergers at such companies surges nearly four-fold in that fifth year. Retirements accelerate as well.
For more on the study check out the professors' report. If you want to perform your own analysis you might consider checking out Liberum's Management Change Database which is far more comprehensive than the data used by the two Harvard Professors.

Children's Place CEO Forced Out

Children's Place Retail Stores PLCE (NASDAQ), the once high flying children's retail chain forced its CEO, Ezra Dabah to resign and named board member Chuck Crovitz as interim CEO. Dabah has served as the company Chairman of the Board since 1989 and Chief Executive Officer since 1991. In a press release the retailer said,

... an investigation found Dabah did not comply with its securities-trading policies. The internal probe also found irregularities in expense reimbursement practices by its chief creative officer. The company said none of the violations have a material affect on its operating results. The company went to say, "in light of Mr. Dabah's resignation and the change in executive roles, the company expects that additional time will be required before the company can complete its overdue Annual Report on Form 10-k for the fiscal year ended February 3, 2007, including its audited financial statements for such year, and its other overdue SEC periodic reports.
The company also announced it will soon engage a search firm to conduct a search for a permanent successor to Dabah. The initial market response to the announcement was very positive. The stock jumped after the announcement. The company still faces, however, a number of major hurdles particularly with regard to the management and approach of the firm. Children's Place has been steadily losing ground to competitors. Can new management make a difference or are the company's problems far more complicated than management alone?

For more:

NJ Record
CNN Money
Prime Newswire
Wall Street Journal (reg. req.)
MSN Money
RTT News

Microsoft Looks To Outside Talent to Compete

Microsoft MSFT (NASDAQ) appears to be taking a new tack in its competition with Google and other competitors. According to a piece by Robert A. Guth in the Wall Street Journal, Microsoft has finally recognized the need to hire outside the firm to compete with it rivals. In the piece Guth stated,
Before Brian McAndrews agreed to take charge of a crucial piece of Microsoft Corp.'s online advertising business, he insisted on a key condition: that he be granted certain power over the engineering part of the operation.
For a quick look on the outside talent Microsoft has hired over the last number of months, contact Liberum Research and we will provide a overview for free.

For more see:


Monday, September 24, 2007

Has General Mills Re-written Succession Planning Rules?

In what many considered a surprise announcement, General Mills GIS (NYSE), the second largest U.S. cereal maker, announced that its chief executive officer for twelve years, Stephen Sanger is stepping down effective immediately. The company promoted president and chief operating officer Kendall J. Powell to chief executive officer. Sanger will remain as chairman through May.

Company spokeswoman Kirstie Foster said, was Sanger's decision to step down as CEO. The board made the decision Monday morning, she said, just before the the company's annual meeting. The hand over was, "a planned and thoughtful part" of the company's succession plan, although General Mills had not previously announced that Sanger would be leaving his post, she said. She went on to say, "The Board values Stephen's continuing leadership as chairman, and Stephen agreed to continue in that role for a time to aid in the transition".
It is very unusual for succession planning to work in this manner, yet there were some indications earlier that Powell was a successor in waiting. Earlier in the month, CFO magazine had a piece by Laura Mars about the ambiguity surrounding the vice chairman title. In the article, Mars referred specifically to Powell as Sanger's successor.

Powell appears to be a good choice to replace Sanger. Powell is 53 years old and has worked with the company since 1979. General Mills promoted Powell to president and chief operating officer in May 2006 after he increased marketing of new cereals to win back customers from Kellogg. He holds a bachelor's degree in biology from Harvard and an MBA from Stanford. The real question that remains unanswered is is why Sanger left or was forced out. The company met its expected numbers and has been performing quite well.

Keep a close eye on the company's operations and the steps Powell follows to transition to his new leadership.

For more on the change:

Newsvine AP Story
Business Journal
Ad hoc News
Market Watch

Friday, September 21, 2007

Noble Corporation CEO Unexpectedly Resigns

In an unexpected announcement oil and gas services provider Noble Corporation NE (NYSE) said that Mark A. Jackson has resigned as chairman, president and chief executive, effective immediately, and will be replaced on an interim basis by William A. Sears. Sears has been a director of the company since January 1998. He has more than 40 years of experience in the oil and gas industry and retired from his position as director of operations for British Petroleum Exploration in 1997.

Jackson joined Noble in September 2000 as Senior Vice President and CFO, and was promoted to Chief Operating Officer in March 2005. He was named President of the company in February 2006 and appointed as CEO in October last year. In April this year he was named as Chairman of the company's board. According to a piece in MarketWatch, Lawrence Chazen, a member of the board is quoted as saying,
"He's moving on for personal reasons," said Chazen, an investment advisor in Monterey, Calif. "His family's in Dallas and he'd been with us for a long time, and I just think he maybe wants to move back to Dallas." Chazen said he was "surprised" by Jackson's resignation.
It is difficult to determine the reason behind the surprise announcement. Earlier in the summer, Noble announced an internal investigation of its Nigerian operations to determine whether one of its affiliates paid bribes for permits to move rigs into Nigerian waters. The company said that its probe would focus on the legality under the U.S. Foreign Corrupt Practices Act or FCPA, as well as under local laws.

Noble is a solid company but investors should keep a close eye on coming events as the company works to find a new CEO.

For a different take see:

Reuters last Wed.

Thursday, September 20, 2007

Wet Seal CFO Moves to Old Navy - What's Up?

Glenn Curtis of Investopedia wrote a piece on the recent move by John Luttrell, the CFO of Wet Seal to CFO for down and out Old Navy owned by the Gap GPS (NYSE) . I specifically highlight the piece because Curtis gives a simple but right on the money analysis of the possible reasons behind Luttrell's decision to change ships. Take a look.

Surprise, Surprise - Nestle Picks Bulcke Not Polman

Nestle NSRGY (NQB) the world's largest food company, named insider Paul Bulcke as its new chief executive, replacing Peter Brabeck, who will drop his executive functions in 2008 to serve as group chairman.

The surprise choice of Bulcke, head of its Americas operations, surprised most analysts who predicted Nestle would name Chief Financial Officer Paul Polman as Brabeck's replacement. Polman, the company's star CFO was considered by most as a shoo in for the CEO position. Keep an eye on the firm for the next couple of weeks, to see if Polman decides to stay on or jump ship.

For more on the change:

Advertising Age (What everyone thought)

CEO Pay - A Surprising Argument in Favor

Former Secretary of Labor in the Clinton Administration, Robert Reich, recently provided surprising commentary in a September 14 piece in the Wall Street Journal. Reich who was usually perceived as far to the left of his boss, Bill Clinton, recently wrote a piece entitled CEOs Deserve Their Pay. Worth a look, I prefer to defer comment on the issue.

For more see:

Economist's View Blog
Business Week Management IQ Blog
ReputationXchange Blog

Tuesday, September 18, 2007

Medical Device Manufacturer Finally Gets Its Man

Steris Corporation STE (NYSE) a medical products manufacturer appointed a new CEO, Walter Rosebrough, Jr., after an extensive search was put in place nearly a year ago when it was announced that CEO Les Vinney would step down in June 2007. Rosebrough, who has had extensive experience in the medical products industry appears to be a good choice for the firm. According to a story in the Cleveland Plain Dealer:
Rosebrough, 53, has spent more than 20 years in the health-care industry in a series of senior management positions. He served as president and chief executive officer of the Hill-Rom Co., a wholly owned subsidiary of Hillenbrand Industries Inc. Hillenbrand provides medical technologies and related services for the healthcare industry, including patient support systems, non-invasive therapeutic products for a variety of acute and chronic medical conditions, medical equipment rentals and workflow information technology solutions.

Rosebrough was executive vice president of Hillenbrand Inc. when, in 2000, he left the company to lead Vasocor Inc., a Credit Suisse First Boston- funded start-up health-care company, as president and chief executive officer. The company focused on development of a non-invasive medical device to enable early detection of atherosclerosis.

Since early 2005, Rosebrough has served as the president and chief executive officer of Coastal Hydraulics Inc., a private company. Coastal Hydraulics provides hydraulic and pneumatic systems, equipment and services used in industrial, marine and mobile equipment applications.
Rosebrough's extensive background and experience should serve Steris well. Watch Rosebrough's early moves at the firm and decide for yourself.

Wednesday, September 5, 2007

Petsmart Appoints New CFO

Petsmart PETM (NASDAQ) appointed Lawrence Molloy senior vice president and chief financial officer, effective late September. Molloy will be the principal financial officer and will lead all areas of finance including analysis, planning, compliance and reporting, as well as business and financial strategy. He will report to Phil Francis, chairman and chief executive officer. He succeeds Tim Kullman, who resigned earlier this year. Molloy joins PetSmart after four years at Circuit City Stores Inc., including the last year as vice president and chief financial officer of retail.

Molloy's appointment comes as Petsmart appears to have acknowledged potential financial problems associated with the earlier tainted dog and cat food scandal that hurt pets all over. Earlier today, Michelle Leder in her blog wrote a piece on Petsmart where she referred specifically to a recent SEC filing the company made last Friday regarding potential financial difficulties the company might face with lawsuits associated with the pet food scandal. Is Molloy's appointment a coincidence to Petsmart's Friday SEC filing?

For more on the change see:


Turnover Continues at AMD

A number of blogs have confirmed a new turnover in AMD's sales department. Rick Hegberg resigned as AMD's Senior VP A few weeks back we discussed other major turnovers at AMD.

For more on the latest change see:
Beyond 3D Forum