Management Turnover as Change Agent

Monday, June 30, 2008

Recommended Reading - As CEO pay in Europe rises, so does talk of curbing it, USA Today

Jeffrey Stinson of USA Today wrote an interesting piece on growing resistance by European policy makers and shareholders as regards to CEO compensation.  According to Stinson,
As losses pile up on balance sheets and stock prices drop, Europe is threatening to rein in U.S.-size compensation for its top corporate executives.

From Paris to Amsterdam to Berlin, finance ministers, politicians and government watchdogs are talking of curbing soaring executive pay, bonuses or golden parachutes for CEOs who depart with big severance packages.

... Behind the threats is growing public and shareholder ire with multimillion-dollar compensation packages that are starting to rival American CEO pay at the same time European economies and financial markets are sagging.
Keep a close eye on Europe's approach to CEO compensation.  If they move on the issue, American CEOs will find themselves under even greater pressure as to exorbitant executive compensation packages.

Friday, June 27, 2008

Recommended Reading - Google's CFO Search: Why'd it take so long?

Google GOOG (NYSE) recently hired Bell Canada's executive, Daniel Pichette, to become its new CFO.  Google's search to replace its former CFO, George Reyes, took ten months, a long time to replace this position.  Joseph Wiesenthal of PaidContent.org wrote a short but incisive piece on the process, entitled Google's CFO Search: Why'd it take so long?  The piece is worth a quick read.

Thursday, June 26, 2008

CEO Watch List - Rick Wagoner, GM, Update 5

As the American Automobile Industry flirts with a serious financial contraction or possibly worse, General Motors GM (NYSE) continues to lead the pack downward.  Earlier today Goldman Sachs listed GM as a sell.  According to a story today by Kevin Krolicki of Reuters
Shares of General Motors Corp hit their lowest level since 1955 and dragged down the auto sector on Thursday after Goldman Sachs cut the struggling U.S. industry's largest manufacturer to a "sell" rating and warned it would have to raise capital.
... With the Thursday price fall, GM's market cap fell to less than $6.5 billion. The company has the smallest market cap in the Dow Jones industrial average .DJI, of which it has been a component since 1925.
As I have been discussing for some time now, Richard Wagoner, GM's CEO, remains on the hot seat.  He was recently interviewed by Smart Money Magazine's, Reshma Kapadia.  I have excerpted below two of the interview's Q and A's to give you a flavor for Wagoner's problems and how he views them.
A lot of people are talking about a U.S. recession. Can the great American automaker still turn things around?

Sure. There are a number of things that will play out over the next couple of years that should improve our earnings. When we complete the 2007 labor agreement, we will get $4 billion to $5 billion in savings, a half billion when our supplier Delphi gets out of bankruptcy, and if the U.S. industry gets back to average sales, that will be $1 billion to $1.5 billion, conservatively. We don't have the profitability we want, but we are improving our cash flow. So even in a very difficult U.S. environment, help is on its way. But we're not waiting for help to get here. We are coming up with other ways to improve our cost structure, including a buyout offer for U.S. hourly employees.

What do you say to those shareholders who are fed up with the stock price?

I'm a big shareholder myself; I share the frustration. I'm confident that as the market psychology turns and assumes some of these issues are behind us, we'll be well positioned. I talk to major investors regularly, and of course they would love to see a higher stock price. But they say, "Keep going and do the right stuff for the future." So that's what we are trying to do.
The real question I am thinking -- is it now too late to make a change at the top of GM right now as gas, inflation, the economy, SUVs, Hummers and trucks all conspire to complicate the problems facing General Motors? 

For more:



Wednesday, June 25, 2008

CEO Watch List - Sir Stuart Rose, Marks and Spencer, Update 1

Sir Stuart Rose, the CEO of British retailer, Marks and Spencer who despite a great deal of opposition took on the role of Executive Chairman of the firm back in March (see blog) finds himself back in the news again.  According to a story by Julia Finch for the Guardian,
Marks and Spencer shareholders are being urged to vote against the retailer's chairman Sir Stuart Rose at next month's annual meeting in protest at his promotion from chief executive.

Corporate governance research group Pensions and Investment Research Consultants (PIRC) has advised its clients - who include many local authority pension funds and faith-based investors - to show their disapproval of Rose's new role. Commenting on the PIRC voting guidance an M&S spokesman said: "They are entitled to their views. We have made our position clear."

... The Association of British Insurers, whose members include many of M&S's biggest shareholders, has stopped short of recommending a vote against Rose. But in its voting guidance to members it gave the company an "amber top" - which urges shareholders to consider the issues carefully before voting.
Keep a close eye on the vote results.  

Tuesday, June 24, 2008

Recommended Reading - After Steve Jobs: Apple's Next CEO?

Fotune Magazine just did an article speculating on who might succeed Steve Jobs should he resign or retire. I point out the artice not becuase of the suggestions but rather because of the incredible bench of talent Apple appears to have waiting in the wings. While no one may be able to replace Jobs, the Forbes list of potential in-house successors is really impressive. Check it out.

Quality Systems Inc. CEO Unexpectedly Resigns

Quality Systems, Inc. QSII (NASDAQ), the software firm designed to automate medical and dental practices, announced the unexpected resignation of its long-time CEO and president, Louis Siverman. Silverman was orginally appointed to his position at the firm back on July 31, 2000. Silverman joined Quality Systems from the outside. Prior to his appointment, he was the Chief Operations Officer of CorVel Corporation, a publicly traded national managed care services and technology firm. Under Silverman, Quality Systems has thrived. When he first came aboard the company stock was trading below $5 per share. Today the stock trades at approximately $30 per share. The company's last quarter was quite successful and demonstrated conmtinue revenue growth.


Quality Systems in making the resignation announcement, indicated the firm planned to begin its search for Silverman's replacement immediately. Silverman is only 49 years of age. Why is he leaving the firm now, especially when all indicators are pointing in a positive direction? There is really very little explanation behind the announcement. It may be simple or may not.

Make sure you keep a close eye on the firm as we move throught the summer months. Silverman's resignation takes place officially on August 16, 2008. The company hopes to have a candidate to replace Silverman by the time his resignation goes into effect.

Suggested Reading - B of A CEO Lewis The Next to Fall?

More and more financial CEOs and CFOs of battered financial firms find themselves the topic of rumors or conjecture. Just today, George Bowser, Jr. wrote a piece for Seekingalpha.com in which he speculated that Kenneth Lewis the CEO of Bank of America BAC (NYSE) might be the next top financial executive to get his walking papers. Bowser bases his speculation on the Lewis' decision to buy and go through with the acquistion of troubled mortgage lender Countrywide Financial CFC. Bowser based his speculation on the recent fall of Kenneth Thompson the CEO of Wachovia who was forced out after his expensive acquisition of mortgage lender, Golden Financial. In his piece Bowser stated,

I believe that if BofA does proceed with the Countrywide merger, Ken’s future at the bank may come to a swift end. BofA will continue to report quarterly losses, just as others in the financial sector. The stock price will suffer and they may have to cut jobs and the dividend rate to conserve capital.
While the Lewis' Countrywide acquisiton may create financial difficulties for Bank of America, I am not convinced Lewis' position is at serious risk. Stay tuned and make sure you keep a close eye on key decisions Lewis and BofA mnakes over the next few months.

Monday, June 23, 2008

Recommended Reading - CEOs Still Making Huge Pay

Allan Sloan of Fortune Magazine was recently interviewed by Scott Jagow of National Public Radio's Marketplace. Sloan talked about the rise in CEO salaries despite growing complaints and resistance from shareholders as it relates to soaring CEO salaries.  
...if there's anything in the world that chief executive officers of U.S. corporations care about, it's their compensation packages. And they care a lot. And no matter what the formula is, or often what the shareholders do, the CEOs influence the process enough -- either directly or indirectly -- that they all make out...
The interview is in text but I recommend you listen to the audio if you can.


Friday, June 20, 2008

CEO Watch List - Kerry Killinger, Washington Mutual

According to a story by Ari Levy of Bloomberg, David Dreman of Dreman Value Management a major shareholder of Washington Mutual WM (NYSE) wants the bank to,
... fire Chief Executive Officer Kerry Killinger and replace its board after an 85 percent stock-price plunge in the past year...
Killinger has already had his power clipped.  He stepped down as Chairman of the bank earlier in the month. The sub-prime credit crisis continues to hurt the economy and wreak havoc with a number of top executives in the financial industry.  Killinger may be forced out as CEO as well.  

Stay tuned.   

For more:

Recommended Reading - Insurance CEOs Lose Jobs As Fast As Banking Chief (Update 1)

Erik Holm and Josh P. Hamilton wrote a story for Bloomberg today examining the unusual pressures Insurance CEOs face in today's marketplace.  According to the reporters,
Running an insurance company turns out to be at least as hard as managing a securities firm.
The story is a worthwhile quick read. 

Wednesday, June 18, 2008

Recommended Reading - Lehman's CEO May Have to Go

John Carney of Dealbreaker wrote a short piece earlier today in which analyzed why Richard Fuld, Lehman's CEO might have to go.  Check it out

Tuesday, June 17, 2008

Recommended Reading - Is Your CEO Street Savvy?

Glenn Curtis, a financial writer and analyst, recently wrote a piece that appeared on Investopedia entitled, Is Your CEO Street Savvy? Curtis outlined what he considered four important factors when assessing whether a CEO was up to the job. The four areas he focused on included:
1. Experience
2. Passion
3. A Good Communicator
4. Street Savvy
The piece is a worthwhile quick read.

Monday, June 16, 2008

CEO Watch List - Martin Sullivan, AIG - Is Out - Update 3

Chalk up another CEO to the sub-prime credit crisis.  AIG's CEO, Martin Sullivan was forced out yesterday, Sunday June 15th, after the company's board had an emergency meeting.  Sullivan will not only give up his CEO title he is also leaving the board.  AIG immediately selected Robert Willumstad, the current chairman and well known former Citibank top executive as AIG's new CEO. Willumstad will remain chairman.   The board also selected Stephen Bollenbach, chairman of US homebuilder KB Homes and former chief executive of Hilton Hotels, as the lead director.  

The dramatic changes came shortly after powerful activist shareholders expressed concern with AIG's management.  See my previous blog for additional details on the concerns raised by activist shareholders.  Sullivan leaves the world's largerst insurer according to Reuters,
... after it suffered two quarters of record losses from risky mortgage bets and its share price more than halved over the past year.
While the latest management changes were applauded by some of the key activist shareholders. In another Reuters piece Eli Broad was quoted as stating,
"Both are proven, experienced and successful financial executives," he said in an emailed statement. "I expect that they will attract badly needed, first-rate financial and investment executives to AIG."
The real question for me and many others is whether Willumstad is the right person for the position.  While he originally contended for the top Citibank position before Charles Prince another casualty of the credit crisis was appointed head of CitiGroup his background was in consumer banking.  He is not a real insurance guy.  According to report he did have insurance companies reporting directly to him when he was Chief Operating Officer of CitiGroup but that may not be sufficient.  At a minimum expect further management changes.  The Willumstad and Bollenbach appointments will not be sufficient alone to turn the huge AIG ship around but at least it is a well-needed start.

AIG is already in the process of searching for a new CFO.  Expect more changes as Willumstad works to get a handle on all the problems facing the firm.  He has already made a formal gesture of some kind to former CEO and Chairman Maurice Greenberg who was forced out under a cloud but still remains a huge stakeholder in the firm and thorn in its back.  For some time now Greenberg has been one of AIG management's greatest critics.  According to the Washington Times,
Greenberg has been one of most outspoken of AIG's shareholders, many of whom have blamed poor management for AIG's financial troubles. In a May regulatory filing, Greenberg wrote: "AIG is in crisis."
In assessing what might be next for the firm, Hugh Son and Dan Kraut of Bloomberg quoted an analyst from  UBS AG, David Havens who said,
"AIG needs to go through some sort of process to prove to the market that it completely understands the credit risk that it faces,'' ... "Some sort of internal and perhaps external study might be necessary here.''
Watch who AIG appoints as CFO and make sure to stay up-to-date on future management changes, there are sure to be more.  Willumstad has a tough task ahead of him, besides the sub-prime credit related problems, the insurance business has been straining lately under increasing claims due to weather and natural disasters.

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Thursday, June 12, 2008

CEO Watch List - Martin Sullivan, AIG, Update 2

Quick follow up to my previous blog June 9 on Martin Sullivan's status at AIG.  According to a story in Reuters, Catherine Seifert, an analyst for Standard and Poors, wrote a note that indicated AIG needed to reorganize its management and board.  The Reuters piece went on to state:
Seifert said AIG needed to take this step to regain its competitive strength. She also said AIG, the world's largest insurer, needed to provide greater clarity to investors about its risky mortgage bets.

On Wednesday, a group of investors holding about 4 percent of AIG's outstanding shares sent a letter to the board, saying it should form a committee to search for new management.
The Reuters story was not all negative.  The story referred to positive assessments from others regarding both Sullivan and the board.  Only time will tell but the S and P analysis was surely a another negative component to the ongoing pressure on Sullivan and his associates on the board.

Stay close by.

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Recommended Reading - Hazards Being Near the Top, New York Times Dealbook

As a follow up to my previous blog on the latest management changes at Lehman, The New York Times Dealbook had a worthwhile piece on the risks top managers face when sitting a rung below the CEO.  The story is worth a quick read.

Erin Callan and Joseph Gregory, Lehman's CFO and COO Ousted - Management Reeling for an Answer

Days after announcing nearly $3 billion in losses and receiving over $6 billion in new capital to help the firm weather the mortgage crisis, Lehman Brothers Holding Inc. LEH (NYSE) ousted its most recent public face and fiercest defender, CFO, Erin Callan. Lehman also ousted COO, Joseph Gregory. Callan will be replaced by co-chief accounting officer, Ian Lowitt and Gregory will be replaced by Herbert McDade , the head of the equities business worldwide.

Callan, an often times controversial figure, has been rigorously defending the embattled financial firm. She has attempted to take on David Einhorn of Greenlight Capital who has been shorting the stock in a highly public confrontation with the firm's management. Callan, while serving as the public face of the firm lately, has at times found herself on the wrong side of the facts. Lehman's CEO, Dick Fuld has been straining to find some way to avoid the fate of Bear Stearns and if possible avoid a takeover of the firm.

The change in management comes after another big drop in the company's shares this week. According to the company's press release Richard Fuld, the company's Chairman and CEO, was quoted to say,
“Joe (Joseph Gregory) has been my partner for over 30 years and has been a driving force behind who we are today and what we have achieved as a Firm. This has been one of the most difficult decisions either of us has ever had to make,”
There was no specific mention in the press release of how hard the decision was in relation to Callan. Both Gregory and Callan will be remaining with the firm at least for now. It is difficult to determine if these moves will help quell the continuing crisis. Past expereince is not a perfect guide, it did not work for Bear (James Cayne) but may have been what worked for Morgan ( removal of Zoe Cruz). Neither of these two situations, however, were exactly the same.

Stay tuned for the continuing roller coaster.

For more:

Wednesday, June 11, 2008

Recommended Reading - Layoffs Below, Hires Up Top, Business Week's Management IQ

Jena McGregor wrote a short piece on Business Week's Management IQ blog yesterday that assessed the employment market for top executives as compared with remaining employees.  If you follow the numbers or employment trends give it a quick read.

Tuesday, June 10, 2008

Recommended Reading - Steve Jobs Bets the Apple Farm, Time

Josh Quittner of Time wrote a superb piece that laid out the risks and opportunities Apple's CEO, Steve Jobs has made with regard to his latest bet on the impending release (July 11) of Apple's 3G iPhone. According to Quittner, Apple's Jobs is
betting that, at $199 a pop, he'll sell so many iPhones that Apple will dominate the rapidly developing mobile Internet platform. Indeed, he believes that this new phone is so compelling—and so within the reach of the masses—that it's worth revisiting the deal he struck with AT&T for the 1.0 version, which reportedly gave Apple up to $12 to $18 per month on every iPhone that AT&T serviced. Instead, AT&T and other international carriers will now be providing a subsidy—supposedly about $200 a phone—to make the device affordable enough for the masses. The math works pretty well for AT&T...

But for Apple? Over the course of a two-year contract, the company could lose as much as $160 per user versus the old deal. That explains why Apple's stock dropped more than 2% on Monday.

Making Jobs' bet even more dangerous is the fact that we're about to see a whole raft of devices coming out that could give the iPhone 3G real competition. Google's open-source operating system for mobile phones, Android, is just about ready to be shown off in many handsets, from makers such as HTC, Motorola, Samsung and LG Electronics. You can bet that many of those phones will be way cheaper than $199.
I suggested the piece to point out once again the unusual nature of Steve Jobs as CEO and entreprenuer. We will just have to wait and see how the new iPhone does after its July 11 release and what exactly the competition might have up their sleeves.

If I were a betting man... you decide for yourself.

Also check out:

Beer Goes Down Easy But Wine's Another Matter

Trevor O'hoy, the CEO of Australian beer and wine giant Fosters FGL (Sydney ASX), quit (forced out) after the firm issued a profits warning and cut the value of the company's wine assets worldwide by $664 million. The company also initiated a complete review of its wine business. According to Elizabeth Knight of the Sydney Morning Herald,
When the board of a company initiates a strategic review of the main segment of its business and does not invite the chief executive to participate, it is a bit like throwing a party and not letting the birthday boy in. So the Foster's board's decision to undertake a review of the structure and operations of its wine business without the chief executive, Trevor O'Hoy, was a clear message that his part in executing the new strategy did not exist...

... Foster's has undoubtedly had its fair share of bad luck since it invested about $7 billion into its global wine business, and it is this fact that has probably saved O'Hoy until now. But the fortunes of Foster's have plenty to do with management, and this is why O'Hoy has lost his scalp.
Knight went on to write,
The chairman yesterday admitted what investors have known for years - that the company paid too much for its main Australian wine investment, Southcorp. It also paid too much for its US wine acquisition, Beringer. It just got drunk on the prospect of superior growth from wine. But like any addict the first stage to recovery is to admit there is a problem. How to solve it is not so easy.
New management will be an extremely important component in the company's attempt to turn its problems around. According to Malcolm Maiden of the Australian Age who in his story wrote about Fosters' wine division,
... there has to be some uncertainty about how the division will be structured, at least, and about whether the review will be catalyst for something bigger — a wine buy-out or a full takeover, for example — and for that reason the search (CEO search) is more complicated than it could have been.
Analysts and investors are all wondering if there is a possibility for some kind of sell-off in the making. Fosters has indicated it plans to keep the wine business and find a way to make it work. Only time and a new top executive will help determine the tea leaves for the company. Keep a close eye on the company and its forthcoming moves. There is likely more to come.

For more:

Financial Times
International Herald Tribune
Reuters
Herald Sun

Monday, June 9, 2008

CEO Watch List - Martin Sullivan, AIG, Update 1

Just a month ago I put AIG's CEO Martin Sullivan on my CEO watch list.  So far, Sullivan has managed to keep his job.  According to Felix Salmon of SeekingAlpha.com the Wall Street Journal has run another story today placing new pressures on Sullivan.  According to the WSJ article by Liam Pleven and Randall Smith,
American International Group Inc.'s embattled chief executive, Martin Sullivan, is now facing mounting dissent from some of his largest shareholders.

Two days before AIG's May 14 annual meeting, three major shareholders who effectively controlled more than 100 million shares -- about 4% of the company's stock at the time -- sent a blistering letter to the company's board....

... people familiar with the board say Mr. Sullivan needs to turn things around fast. Amid widespread turmoil in the credit markets, AIG has reported two consecutive record quarterly losses totaling $13 billion -- almost as much as the firm made all of 2006 -- and last month raised $20 billion to bolster its finances, a remarkable reversal for an insurer long prized by investors for its business savvy.
The added pressure of the WSJ article definitely turned the screw a bit more on Sullivan's chances to survive as CEO.  Keep a close eye on AIG and any new business decisions Sullivan and/or the company makes.

Suggested Viewing - Talking Management - the war for talent

Kevin Moore of Canada's Report On Business (Globe and Mail) conducted an interview with OgilvyOne's Brian Fetherstonhaugh on how to find, and keep, the very best talent.  The interview is worth viewing if you are interested in corporate talent management. 

Recommended Reading - Soapbox Proactive

Steven London and Matthew S. Gilman wrote a blog in the Deal.com's Dealscape in which they advocated,
Corporate boards of directors and management can -- and should -- be more proactive in preparing for and addressing increasing activism by shareholders.
London and Gilman are partners with Pepper Hamilton LLP and have formed the firm's shareholder activism team.  I made note of this piece due to the growing importance of shareholder activism and the fact that at times it has a direct impact on top management.

Friday, June 6, 2008

Bearing Point CFO Resigns After Less Than One Month on Job

Bearing Point's BE (NYSE) CFO, Eileen Kamerich, resigned her position with less than a month on the job. The company's SEC 8K filing indicated,
Ms. Kamerick’s decision was not based on any disagreement with the Company’s accounting principles or practices, financial statement disclosures or otherwise.

Kamerick came to Bearing Point from Heidrick and Struggles where she had served as the executive vice president, chief financial and administrative officer for the global executive search and leadership consulting firm. According to the filing,
Eddie R. Munson, a director of the Board and a former member of the Audit Committee, has agreed to serve as the Company’s Chief Financial Officer ... on an interim basis.

... Munson has been a member of the Company’s Board of Directors since October 2007, and a member of the Audit Committee from October 2007 through June 2008. He resigned as a member of the Audit Committee effective as of his appointment as the Company’s Chief Financial Officer. Mr. Munson is a retired partner with KPMG LLP and has more than 30 years of auditing experience focusing on the financial services, government and automotive industries.
Kamerich's initial appointment at Bearing Point, came after a number of other high level changes at the firm. Back in March, the company hired a new chief operating officer, David Hunter. Hunter previously worked for Accenture. A few months before Hunter's appointment (December 2007), Bearing Point promoted Ed Harbach to serve as the company's President, CEO and member of the board. One can assume Harbach is working to get his own management team in place. The question remains what went on here and whether there is something to be worried about.

Keep a close eye on the company.

For more:

Thursday, June 5, 2008

Recommended Reading - Activist investors' retail campaigns

Activist investors (e.g., Carl Icahn, Wattles Capital Management, Pershing Square's Ackman, Crescendo Partners, Sun Capital), who remain a potent force as it relates to executive turnover for companies they pressure, may find themselves with a higher profile in relation to the struggling retail industry.  According to a blog in the Deal.com's Dealwatch a number of high profile retailers can expect increasing pressure from activist investors.  According to the piece,
Times are tough for retailers, and activist investors are at the ready lobbying for moves to boost shareholder value including: sale-leaseback deals to raise cash to return to shareholders; shuttering underperforming stores; board shakeups; selling a company entirely; or thwarting sale plans that undervalue assets. 

The Deal's Matt Miller wrote recently:

Real estate values are down, and energy costs are up. With the belief that a recession is upon us and that the near-term economic future is bleak, consumer confidence has been in free fall. That gloom has put a screeching halt to spending on much more than essentials.
For some time now, we have been following many of the specific companies referred to in the Dealwatch piece.  Keep a close eye on related executive turnover for possible additional clues.

Wednesday, June 4, 2008

CEO Watch List - Rick Wagoner, GM, Update 4

Rick Wagoner finally gets it.  

It took gas prices going through the stratosphere but he finally gets it.  According to David Welch for Business Week GM has finally taken steps to address some of its major flaws. Welch writes Wagoner made it clear at the company's June 3 shareholders meeting that,
General Motors (GM) is turning more than a decade of car-making on its head.

... Richard Wagoner Jr. announced plans to introduce a new line of compacts for North America, while also boosting passenger car production and closing four truck plants.

...in perhaps the most symbolic shift away from massive vehicles, the company may sell the Hummer brand...
While I would not call the new direction a dramatic surprise or salvation of the company, when one considers the overall state of General Motors particularly in North America you can at least acknowledge he has finally started to put the company in a direction that makes some sense.

Stay tune for more details.

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Recommended Reading - Mean Street: Spare a Prayer for the CEO

Evan Newmark wrote a piece on the WSJ's Deal Journal blog that is worth a read.  Here is a taste of what Newmark wrote,
... But spare a prayer for the CEO. It is tougher than you think to be a CEO. What goes through the mind of the CEO isn’t just about money and power. It also is about the burden of failure.

When thousands of people are depending on you, that is a heavy burden. You don’t want to let your employees, shareholders and board down. In failure, you do.

Just look at Chuck Prince and Jimmy Cayne. Broken men...
If interested check it out.

Monday, June 2, 2008

CEO Watch List - Rick Wagoner, GM, Update 3

Rick Wagoner, the embattled CEO of General Motors GM (NYSE), who has been on my Watch list since early November of last year, will have his day tomorrow in front of disgruntled shareholders.  According to a story today by Alex Taylor III, Senior Editor in Fortune,
... Rick Wagoner will explain to shareholders just how the automaker plans to survive the changes sweeping the industry.

Observers from Tokyo to Toledo will be paying close attention.
... Late to catch this trend as usual, General Motors and Ford (F, Fortune 500) are frantically rewriting their product plans for the next dozen years to account for changing standards while they try to prop up sales of their current model lines in the short term.
Will GM continue to reward top management as the car industry continues to flounder and misdiagnose the market.  The answer is probably yes.  We will just have to wait and see, stay close by.

Recommended Reading - CEO Succession 2007 - The Performance Paradox

Booz and Company just released its annual CEO succession study.  This year's study makes a counterintuitive argument.  According to a synopsis of the the study by Per-Ola Karlson, Gary L. Neilson and Carlos Webster the study,
... found little correlation between poor short-term performance and CEO dismissals over a ten-year period. In fact, the worst-performing CEOs actually faced a low probability of being forced out of office in the short term. The study, which will be published in the Summer 2008 issue of strategy+business, looked at CEO turnover at the world’s 2,500 largest publicly-traded corporations.
Liberum does not find the Booz results meet with similar conclusions with our own studies. Liberum typically covers a larger universe of companies but even so there remain a significant number of companies that pushout CEOs due to short term performance.  Determine for yourself check out the Booz and Company study.

Recommended Reading - How to get to the top

The Economist magazine published an interesting article that examines recent research on the best way for executives to get to the top.  According to the article,
Monika Hamori, professor of human resources at Instituto de Empresa in Madrid, it is finance chiefs who are most likely to get the top job, though experience in operations—running parts of the company—is also essential.
I am sonmewhat skeptical of the research but it is definitely worth a quick read.

Credit Crisis Inks Another Notch - Ken Thompson, CEO, Wachovia

Early in May (see previous blog) Wachovia's WB (NYSE) then CEO and Chairman Ken Thompson was forced to give up his chairmanship after the bank released dismal numbers.  The second shoe has now fallen.  Wachovia's board yesterday forced Thompson to resign his CEO post as well. According to David Mildenberg and Hugh Son of Bloomberg
... the board blamed him for losses that cost the lender more than half its market value in the past year. The stock fell as much as 4 percent.

Chairman Lanty Smith was appointed interim CEO, the Charlotte, North Carolina-based company said today in a statement that cited " a series of previously disclosed disappointments and setbacks'' for the change. Thompson quit at the board's request, the statement said.
Triangle Business Journal wrote in a story today in which the Jounal quoted Lanty Smith, the new interim CEO,
"no single precipitating event" - such as the disclosure of even wider losses - caused Thompson's ouster.

"... A series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and its performance," Smith, 65, said in a prepared statement. "The board believes new leadership will help to revitalize and re-energize Wachovia and enable it to realize its potential. We will move Wachovia steadily ahead as a strong, independent company by continuing to focus first on the needs of our customers."
Under the gun, banks have been fervently trying to split the CEO and Chairmanship positions to try and allay growing unhappiness by shareholders and activists.  We will just have to see if this will be enough for Wachovia's naysayers.  Stay tuned.

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