Recommended Reading - Seeing Peripherally

Dr. Leslie Gaines Ross who writes the reputationxchange.com blog for Weber Shandwick wrote a short piece September 27 in her blog which she referred to a Wall Street Journal article that quoted Intel's CEO, Paul Otellini discussing the merits of a good CEO.  According to Otellini,

“A CEO’s main job, because you have access to all of the information, is to see the need to change before anyone else does.”

Dr. Ross took Otellini's quote further and stated a,

CEO’s primary job is to also see the early warning signs on the horizon.  Another way to say this is that a CEO’s first and second job is to use his or her peripheral vision in addition to strategic vision.

All obvious observations but highly pertinent especially now.  As the overall reputation of corporate CEOs continues to take major hits, particularly those in the financial service industries, investors need to redouble their efforts to monitor key management changes and strategic changes at public companies they are invested in might be considering for possible investment.  Take a look at Dr. Gaines story and overall blog. 

Recommended Reading - Bailout Executive-Pay Curbs Use Loophole-Rich Tax Law (Update1)

Ryan J. Donmoyer and Christopher Stern of Bloomberg wrote a story today entitled, Bailout Executive-Pay Curbs Use Loophole-Rich Tax Law.  The piece analyzed the latest iteration of the proposed restrictions on executive compensation.  The story is a worthwhile read if you are concerned with executive compensation, golden parachutes and or their possible limitation.

Another approach checkout Eric Reguly's piece in today's Canada Globe and Mail entitled, The running dogs of compensation. 

Recommended Reading - Two New Chief Execs with Resumes for a Quick Sale

Kevin Dobbs wrote an incisive piece for the American Banker that focused on newly hired bank CEOs (Alan Fishman for WAMU and Charles Rhinehart for Downey Financial) and what they typically need to bring to the table.  According to Dobbs,

Deep into a pulverizing credit cycle with no clear turning point, newly minted chief executives at banking and thrift companies are increasingly garnering more attention for past experience selling companies—experience that many expect them to have to draw upon soon.

Against a backdrop of mounting investor discontent, analysts said, swift action to salvage shareholder value is the task at hand.

Dobbs does not bring anything new to the table but he does offer a good overview.

Recommended Reading - CEO and CFO Career Consequences to Missing Quarterly Earnings - Academic Paper

Richard Dean Mergenthaler (University of Iowa), Shrivaram Rajgopal (University of Washington), and Suraj Srinivasan (University of Chicago) published CEO and CFO Career Consequences to Missing Quarterly Earnings Benchmarks(June 27, 2008).  For those really interested in key executive turnovers and their potential impact the paper is a worthwhile read.  A quick abstract of what the authors found is as follows:

... missing quarterly earnings benchmarks, especially the analyst consensus earnings number, is associated with career penalties in the form of a reduced bonus, smaller equity grants, and a greater chance of forced dismissal for both CEOs and CFOs during the period 1993-2004.  These results are obtained after controlling for the magnitude of the earnings surprise, operating and stock return performance, and are significant in a statistical and in an economic sense.  Career penalties for failing to meet the analyst consensus estimate are higher for firms that give quarterly earnings guidance and in the post-SOX period.  Our evidence suggests that (i) boards appear to react directly to managers’ ability to meet earnings targets or to the information that is reflected in meeting such benchmarks; and (ii) senior managers’ preoccupation with meeting earnings benchmarks might be based at least partly on career concerns.

 Download the paper and see for yourself.

Activist Shareholders Force Out Unisys CEO

Yesterday the board of directors of Unisys UIS (NYSE), the computer services firm, announced that Joseph W. McGrath, the company's president and CEO, had agreed to step down by year's end.  McGrath had been in his position for three years.  Unisys and particularly McGrath have been under intense pressure from shareholders to make major changes at the firm.  The company has been languishing for sometime now and has seen a decline in revenue over the last few years.  Special pressure has been applied by MMI Investments LLP, an activist shareholder who owns over 9% of the firm.  Back in January of 2008, MMI wrote an angry letter to Unisys management.  A portion of the letter stated,

...we are mystified by management and the board’s inaction in the face of Unisys’ ruinous stock price performance over the past year. We believe Wall Street’s utter rejection of Unisys stock is indicative that the restructuring benefits are not enough to correct Unisys’ dramatic undervaluation. We believe that Unisys has serious flaws in its strategic configuration, which impair stockholder value due to the taint of the secularly declining Technology business and obscure market recognition of the highly-valuable U.S. Government business. Therefore we believe it is crucial that Unisys move immediately to announce the engagement of an independent, qualified investment bank to perform a review of all available strategic alternatives, with a particular focus on the potential realization of the U.S. Government business through a sale, tax-free spin-off or subsidiary IPO. This assignment should include undertaking the prompt execution of whichever transaction or transactions will lead to maximizing stockholder value.

Management at Unisys initially resisted MMI's efforts but in May after growing pressure from shareholders and a declining stock value the company was forced to relent a bit.  Unisys gave MMI's president , Clay Lifflander, a board seat and as requested by MMI's January letter the company retained Goldman Sachs to help recommend strategic options for the firm.  

The steps taken in May ultimately were not sufficient to make the changes in the company as requested by MMI and other shareholders.  MMI has continued to place pressure on Unisys to to spin out its government outsourcing division as a new company.  The activists finally got McGrath's head.  The change at the top is a positive for the firm but we will have to see who they end up hiring and what he/she intend to do with the firm.

For more:

Unisys Press Release

Philadelphia Inquirer

CNET Asia

PC World

Information-Age

Valley Wag

Philadelphia Business Journal

Wall Street 24/7

Recommended Reading - Footnoted.org's Take On Executive Compensation and Treasury Bailout

Michelle Leder of Footnoted.org wrote an interesting entry in her blog yesterday on the issue of executive compensation.  Her piece was written in light of the impending bailout legislation from the U.S. Treasury and pressure from parts of Congress to impose some form of limitation on executive compensation for financial firms that might participate in the plan.  

I highly recommend the quick read.

For more:

MSNBC (Business Week)

CEO Watch - Philip Schoonover, Circuit City, Update 5

Nothing really surprising about the news yesterday that Circuit City CC (NYSE) CEO, Philip Schoonover was finally out.  The troubled electronics retailer and its CEO have been under intense pressure for sometime now.  Many analysts and others (see earlier blog) have been predicting his demise for more than a year.  Schoonover resigned yesterday in the midst of a proxy fight.  His resignation appears to be a victory by activist investor Mark Wattles (owns nearly 6.5% of the firm) who has been seeking a solution for the firm's continuing struggles. The real question is whether or not Wattle's success in finally getting Schoonover out as CEO will ultimately be just a pyrrhic victory.

The board named James Marcom, a current member of the board, as the acting president and CEO.  He joined the board back in June.  He is an ally of Wattles and was originally nominated by Wattles to become a member of the board.  The board also appointed Allen B. King as the new chairman.  According to a story by Ylan Q. Mui of the Washington Post,

Marcum has held executive roles at two of Wattles' ventures, retailer Ultimate Electronics and Hollywood Entertainment video rental.

The company is probably still looking to be sold.  In a Business Week story back in June, Wattles was quoted as saying,

... he wants the company sold as soon as possible.

We will just have to see what Marcom does.  I can not see a scenario right now where the company could be sold.  According to the same Business Week story,

Whether Marcum decides to sell the company or turn it around, he has his work cut out. He's taking over amid a contracting economy and credit crunch, when retailers are filing for bankruptcy left and right. "There's deceleration in all key consumer electronic products," says Andy Hargreaves, an analyst at investment bank Pacific Crest Securities in Portland, Ore. "With all these headwinds, Marcum doesn't have an easy job."

Schoonover over his two year tenure as CEO of Circuit City made a series of management blunders that ultimately may be impossible to come back from.  This is one situation investors should pay close attention to.

For more:

Information Week

CNET

Bloomberg

Wall Street Journal

Barron's Tech Blog

Bloggingstocks

Seeking Alpha

Market Beat WSJ Blog

Succession Planning As it Should Be - Dupont

Dupont Co. DD (NYSE) the hug chemical manufacturer has shown American industry how succession planning at the top should be managed.  Today the company announced that Charles Holliday, a 38 year veteran of the firm and the company's CEO for the last ten years, will be stepping down as of January 1.  The board announced that Holliday will be replaced at the time by Ellen Kullman.  Kullman currently is an executive vice president and a member of Dupont's office of the chief executive.  She has been with the firm since 1988.  According to Reuters,

"Kullman has been groomed for the top position over the last two years,"

Kullman will be named president and director on October 1.  Both Kullman's background and great success at the firm appear to make her a great fit for the CEO position.  According to an AP story,

Revenue in the company's safety and protection segment increased from $3.5 billion to $5.5 billion while she was group vice president from 2002 to 2006.

Dupont's succession planning may ultimately serve as a case study for large firms.  Keep a close eye on Kullman as she moves to succession and takes over the reins of one of the largest chemical companies in the world.

For more:

Delaware Online

Portfolio.com

MarketWatch

Bloomberg

Renewables Firm Ascent Solar Jettisons CEO

Ascent Solar ASTI (NASDAQ) a renewable energy firm involved in the development of thin film solar power modules announced the resignation of its CEO, Matthew Foster.  Foster had been with the development firm since 2005.  According to the company's press release,

... the Board and its President and CEO have mutually decided that a

 change of leadership presents the best path forward for the company, as it heads into the manufacturing phase of its development. Effective September 19, 2008, Matthew Foster, its President and Chief Executive Officer, has resigned his position. Dr. Mohan Misra, Ascent Solar’s Chairman and Chief Strategy Officer, will serve as the company's interim President and Chief Executive Officer until a permanent replacement is found. 

The company's press release went on to quote Foster upon his resignation in which he stated,

“Ascent Solar is transitioning from a research and development company to a manufacturing and commercially focused organization. I am pleased to have been the leader of Ascent Solar during this initial stage, and I felt that new leadership would be better at leading Ascent Solar’s next phase of growth where operational and manufacturing expertise will be critical. I expect Ascent Solar to continue to grow as a leader in the thin film photovoltaics arena,”

Ascent Solar was also in the news today for a story related to short selling and its impact on renewable energy related firms.  According to a story in Sustainablebusiness.com,

Some renewable energy companies feel their stocks have been illegally targetted by short sellers.

... "Not only have financial companies been targeted, but many alternative energy companies, and solar companies in particular, seem to have been favorite targets for this illegal and manipulative naked short selling action," said Evolution Solar Corporation (Pink Sheets: EVSO) in a release.

... According to Evolution Solar, other illegally shorted solar companies on the SHO Threshold List are Akeena Solar (NASDAQ:AKNS), Ascent Solar Technologies (NASDAQ:ASTI), Solar Fun Power Holdings (NASDAQ:SOLF), Sunrise Solar (OTCBB:SSLR), and SunPower Corp (NASDAQ:SPWR), all of which have seen substantial price declines.

While it is possible Ascent stock value may have been impacted by short sellers the fact that the CEO is leaving so suddenly probably means the decline in stock value is more associated to the product and top management.  At a time went renewables are very high profile and the company has been in an extensive development phase investors should keep a close eye on the moves the company makes over the next number of months.  Particular attention should also be paid to the individual the company ultimately finds to permanently replace Foster.

Stay tuned

Update to New CEO and Chairman for Alcatel-Lucent

Alcatel-Lucent ALU (NYSE) which recently hired a new CEO and chairman, Ben Verwaayen and Philippe Camus respectively (see earlier blog), have begun to make management related changes.  Supervisory directors Ed Hagenlocker and Jean-Pierre Halbron have resigned.  Hagenlocker's resignation is effective immediately and Halbron's resignation will be official shortly.  These changes are only the beginning.  Expect far more as the two top executives begin to get their feet wet and re-examine how to make the firm more effective both business-wise and culturally.

AIG Forced to Take On New CEO After Gov't Takeover (Loan)

As the shock waves continue to reverberate through Wall Street the mighty continue to fall.  The latest to get walking papers was short term AIG CEO Robert Willumstad (see earlier blog).  After the government's $85 billion loan (buyout, takeover, dismantling ) Secretary of the Treasury Henry Paulson informed Willumstad he would be replaced.  Paulson has selected Edward Liddy, a former CEO of Allstate and currently a partner in the private equity firm of Clayton, Dubilier & Rice to become AIG's CEO.  According to a story by James Miller of the Chicago Tribune,

Liddy, who formally joined the private-equity firm Clayton, Dubilier & Rice as a partner only four months ago, will succeed Robert Willumstad, according to reports in The Wall Street Journal, Financial Times and Bloomberg news service.

The articles, citing unnamed sources, said the government had demanded the departure of Willumstad -- who moved into the top spot at AIG in June after his predecessor was forced out because of the insurance giant's deepening mortgage-related problems -- as a requirement of the Fed's $85 billion bailout plan.

Under that plan the Fed agreed to lend $85 billion to AIG, allowing the company to avoid filing for bankruptcy protection, in exchange for warrants that will provide Uncle Sam with an 80 percent stake in the privately owned company.

Liddy is known by Paulson.  Liddy has been on Goldman's board since 2003.   He is known as no-nonsense executive.  According to BNET,

... Liddy has a reputation for shaking things up within the managerial ranks. Shortly after becoming Allstate CEO, Liddy swept away many longtime managers, often veterans who had been with the insurer since it was part of Sears Roebuck, and quickly assembled his own team.

Liddy also overhauled the Allstate agency network by turning many fulltime insurance agents into company contractors, cutting many agents’ compensation. To this day, Liddy is scorned by those Allstate agents.

Moreover, Liddy has shown he can make money in times of great adversity. In 2005, when Hurricane Katrina cost nearly $3 billion in Allstate claims, the company made over $1 billion.

Even with all his previous experience it is difficult to assess how he will fare in his new unprecedented position at the top of AIG which is now controlled by the United States government.  According to a Reuters story in the Guardian by Bill Rigby,

He (Liddy) got the nod to run AIG late on Tuesday, as part of an $85 billion Federal Reserve-sponsored bailout -- which effectively makes the New York insurer government property -- with a mandate to sell off what parts he can.

"He (Liddy) is a very experienced and seasoned professional in the insurance industry," said Larry Coats, a co-manager of the Oak Value Fund, which has in the past invested in large capitalization insurance stocks.

"There's obviously much work to do at AIG, but he has significant experience and would appear to be up to the task," he added. Coats' fund, based in Durham, North Carolina, does not currently hold AIG or Allstate shares.

While at Allstate he slashed costs and employees. According to Rigby's article,

... he helped the company through the after-effects of the 1994 Northridge earthquake, the 2001 World Trade Center attack, and several hurricanes including Katrina in 2005, all of which cost insurers many billions of dollars in claims.

He is not afraid of making unpopular decisions. While in charge at Allstate, he forced the painful transition of many Allstate agents into freelance contracts, and slashed 10 percent of its non-agent staff in a bid to cut costs.

Under Liddy, Allstate made its first real steps away from being an old-line insurer dependent on face-to-face policy sales, to a sleeker, modern company using cheaper telephone and Internet sales channels.

His task at AIG is far more complex and he will find himself under far more pressure from a number of different directions.  Job number one is protecting the taxpayers' money.  After that the real question remains whether he sells off the entire company in pieces or manages to find some formula to keep parts of it functioning?  According to the Deal.com,

(Liddy) may not be staying on for the long term at the embattled insurer; and could return to Clayton, Dubilier & Rice Inc., the private equity firm where he is currently an operating partner.

A representative of CD&R source close to the situation told The Deal that the buyout shop "expects that this will be an interim role and that Ed will return to the firm when he fulfills his responsibility to AIG."

I do not envy him.  Let's hope he does a yeoman's job.  

Nine Month CEO Search Over for Federal Signal Corp.

Back in December 2007 Richard Welding the CEO of street sweeper, fire truck and emergency products manufacturer Federal Signal Corporation's FSS (NYSE) (see previous blog) resigned.  Since that time the company was led by an interim CEO James Goodwin, a former CEO of United Airlines.  After a long and extensive search the company has finally selected a new CEO.  William Osborne a former top executive at Ford Motor Company who had been with the firm for 18 years has been picked to run the company.   He will take the CEO position immediately.  According to a piece by Bob Tita for the Chicago Business Journal,

(Osborne) resigned from Ford earlier this month after 18 years with the Dearborn, Mich.-based company.

Mr. Osborne had been head of Ford’s Australian business in recent months and led the automaker’s Canadian operations from 2005 to 2008. He also worked at automakers Chrysler and General Motors before joining Ford.

The search to find a permanent replacement for Richard Welding was often characterized by a high degree of acrimony and confusion.  An activist shareholder Warren 

Kanders who owns nearly 6% of the firm and was formerly the chairman and CEO of Armor Holdings  has been putting a great deal of pressure on Federal's board particularly as it relates 

to management. According to a story by James Miller of the Chicago Tribune back in August,

(Kanders) has been a vocal critic of Federal Signal Corp's management and the company's recent actions, called publicly for the resignation of Chairman James C. Janning , saying there is "reason to believe" that Janning and possibly several other current board members "may have been involved in a cover-up of insider trading" by family members of former Chairman and Chief Executive Joseph J. Ross.

The alleged cover-up, Kanders asserts in a letter to Federal's board, which he made public today, may be the reason for Janning's "sudden 'retirement' in November 2003."

Kanders, in his letter, said Federal signal's board "has no alternative but to call for Mr. Janning's immediate resignation" and to mount an investigation into Ross' "so-called 'retirement.' "

Kanders disclosed in June that he had compiled a 5.7 percent stake in Oak Brook-based Federal Signal, and not long afterward, launched a public campaign to be named CEO of the company.

The most prominent aspect of Kanders' complaints was his active attempt to become Federal Signal's new CEO.  The board was opposed to Kander as CEO and ultimately made it known that Kanders was never seriously under consideration.  The newly appointed CEO, William Osborne, appears to be a good choice.  He has vast experience with a durable goods manufacturer and understands the needs of a manufacturers' customers and what is needed to make a large manufacturing operation succeed.  

Stay tuned to the continuing drama.  See what steps Osborne takes to possibly placate Kanders and what he does to make Federal Signal improve overall results.

For more:

RTT News

AOL  Money

Credit Crisis Impacts Overseas Executive

Old Mutual plc OML (LSE) the British insurer originally formed in South Africa announced today that its CEO, Jim Sutcliffe would resign with immediate effect. Sutcliffe's resignation comes shortly after the announcement over the weekend of the U.S. government's decision to support Fannie Mae and Old Mutual's admission according to The Guardian,

it lost $135 million through the nationalisation of Fannie Mae and Freddie Mac. ... Last month it admitted losing over £100m through failing to properly hedge itself against falls in Asian stock markets. At the time Sutcliffe blamed certain employees at its US Life arm for "not doing their jobs properly".

The company immediately announced Sutcliffe's replacement, Julian Roberts, the head of Old Mutual's Skandia operations and was previously finance director of Old Mutual. Besides the problems associated with Fannie Mae and Freddie Mac according to the Financial Times' Alphaville blog,

US Life also has a continuing problem with the variable annuity guarantees it has been writing, which have become painfully unprofitable amid the hike in equity market volatility and the recovery of the dollar. That’s led to a further $155m being set aside and the injection of $250m of capital to support its Bermuda-based guarantee-writer.

While Sutcliffe's departure was viewed with surprise by some, according to the Business Times,

In recent weeks, there has been a groundswell in investment circles – among sell and buy-side analysts, portfolio managers, equity sales teams and investment bankers, to name a few - clamouring for Sutcliffe’s departure. They want change, and they want it now. They point to Old Mutual’s indifferent equity market performance and a litany of troublesome acquisitions and the associated snowballing goodwill.

The real question remains, what will Roberts do that might be different from Sutcliffe? Will the insurer find itself a takeover target or are the problems still in need of correction before this even becomes a possiblility? Old Mutual should be able to weather the storm if the right moves are made.

Sty tuned.

For more:

Times Online (update 9/11)
Corporate Press Release
Reuters Africa
Business Week
Bloomberg
MarketWatch

VMware Continues to Face More Management Changes

Yesterday VMware's VMW (NYSE) chief scientist and co-founder Mendel Rosenblum is leaving the firm after resigning.  Rosenblum was a co-founder of the firm with his wife Diane Greene (see earlier blog), the former CEO who was recently forced out and replaced by former top Microsoft executive Paul Maritz.  Maritz is known as a close a associate of EMC CEO Paul Tucci and the parent firm of VMware.  Tucci was known to be unhappy with Greene.  According to TheStreet.com,

Rosenblum stepped down just one week ahead of the virtualization leader's annual user conference.

VMware continues to face a significant brain drain as Maritz takes over the reigns.  Keep close eye on his forthcoming moves and management replacements. 

For more:

GigaOm (update 9/14)

New York Times

Reuters

TheStreet.com

Vnunet.com

Redmond Channel Partners

CEO Watch - Kerry Killnger, Washington Mutual, Update 1

Another financial CEO bites the dust. Kerry Killinger, the CEO of troubled Washington Mutual WM (NYSE) was finally forced out of his job. After failing to stem continuing losses from home mortgages the bank's board had to act. According to a story by Dan Fitzgerald and Peter Lattman of the Wall Street Journal,

For months, Mr. Killinger had fought off a growing chorus of calls for his removal. Even after Citigroup Inc., Merrill Lynch & Co. and Wachovia Corp. pushed out their chiefs over mortgage-related write-downs, and Mr. Killinger disclosed losses at WaMu of as much as $19 billion, the company's board, dominated by associates and longtime allies, continued to back him. The board recently got new blood in key posts and concluded WaMu needed an outsider to signal a fresh start, according to people familiar with the matter. Board leaders conducted a discreet search for Mr. Killinger's replacement and told the CEO Thursday that they wanted him to retire, these people said.

The bank selected Alan Fishman as Killinger's replacement. Prior to the appointment Fishman
was the chairman of commercial mortgage broker of Meridian Capital Group. In the past he was the president and chief operating officer of Sovereign Bank and earlier had been a top executive with Chase Manhattan Bank and earlier on Chemical Bank. While the market initially cheered the change, the bank is far from out the woods. WAMU also announced in its press release it had,

entered into a Memorandum of Understanding (MOU) with the Office of Thrift Supervision (OTS) concerning aspects of the bank's operations, principally in several areas of its risk management and compliance functions, including its Bank Secrecy Act compliance program. In addition, WaMu has committed to provide the OTS an updated, multi-year business plan and forecast for its earnings, asset quality, capital and business segment performance. The business plan will not require the company to raise capital, increase liquidity or make changes to the products and services it provides to customers.

Fishman has a difficult job ahead of him. Keep a close eye on his appointments and his plans. Will he move for a takeover or what?

For more:

Wall Street Journal (update 9/11)
CNN
Bloomberg
Portfolio
CNN
Reuters
MarketWatch
South Florida Business Journal
Dividend.com
Barron's blog

Outsider Chosen to Run Unilever

Unilever UN (NYSE) the Anglo-Dutch consumer products giant went to the outside again to bring some new energy to its operations and firm up its stock.  Under the tutelage of the company's Swedish chairman, Michael Treschow, Unilever selected Paul Polman to replace outgoing CEO, Patrick Cescau who is retiring at the end of the year.  Polman is the first CEO Unilever has hired from outside in its seventy eight year history.  Polman has been Nestle SA's head of North and South American Operations.

While the company may have had a number of qualified internal candidates to take the CEO position, the board, and likely Treschow, understood the need for a take charge

executive who could shake things up a bit.  Choice of an outsider makes the task more likely.  Polman, a well-known consumer products executive who has worked for Unilever's dreaded key competitors, Proctor and Gamble and Nestles',  comes to the company with many of the skills the firm needs at this particular time.  At one time, according to Aude Lagorce of MarketWatch,

Polman, 52, had previously been tipped to succeed Peter Brabeck-Letmathe at the head of Nestle, but found himself in a delicate position after the group picked former head of the Americas Paul Bulcke instead last September. Before joining Nestle as chief financial officer in 2006, Polman had spent 26 years at Unilever archrival Procter & Gamble.

Polman's selection has overall been hailed by the investment community.    According to a Reuters story in Forbes,

"Paul Polman is probably the best candidate in the world to become CEO of Unilever. With hindsight, he was probably the only logical choice," said independent analyst James Amoroso.

"I think they've made an excellent appointment ... They've really scored a home run here," said Martin Deboo of Investec.

... Analyst Virginia Heeribout at Natixis Securities said, "Mr Polman has a reputation as having a highly positive influence on Nestle's stance towards investors."

... "Investors will warm to this decision as Polman's shareholder friendliness has been proven during his short term as CFO of Nestle. He is also an extremely open, honest and likeable personality," said Amoroso.

According to a piece by Vidya Ram of Forbes Marketscan,

"It's very positive that they have appointed another external person. The company has been lagging in performance over the past few years and needs someone who will be more aggressive than the insiders at Unilever," said Keijser Capital analyst Nico Van Geest. Last year Unilever appointed Jim Lawrence, former vice chairman at General Mills, as its chief financial officer, and Michael Treschow of home appliance maker Electrolux, as its chairman. 

Geest said that investors were hoping that Polman, 52, would oversee a large share buyback program, having launched a $21.0 billion share buyback at Nestle last year. Unilever has already been implementing a number of changes including cost cutting, but there is need for more change, said Geest. These include being more aggressive in pricing, gaining more market share in emerging markets and in the United States, where Proctor & Gamble currently dominates.

According to a story by Celeste Perri and Jeroen Molenaar of Bloomberg,

"I'm glad Polman's coming,'' said Felix Lanters, who helps manage about 12.5 billion euros ($18.1 billion) including Unilever shares at Amsterdam-based Theodoor Gilissen Bankiers NV. "Unilever's stock hasn't been doing too well lately. This could be a kickstart."

All indications excluding the comments from analysts and the company's own spin on its decision to choose Polman appear to be in the right direction.  As the laggard of the big three consumer products manufacturers, Unilever needs a more aggressive management and a better understanding of the fundamentals.  Polman with the help of the chairman and others on the management team can make a difference at the firm.

Stay tuned.

For more:

Bloomberg

CNN

Wall Street Journal

Telegraph UK

Times Online 

VMware Faces More Management Changes

Back in July, VMware VMW (NYSE) forced its CEO Diane Greene out and replaced her with Paul Moritz, a former key executive at Microsoft.  Now comes word that VMware has lost its research head.  Richard Sarwal, VMware's executive vice president of research and development according to Kris Kanaracus of ComputerWorld,

...has quit the company and taken a job at Oracle.  

Richard Sarwal, a longtime Oracle verteran, did not stay at VMware long, he joined the company back in December 2007.

Prior to joining VMware in 2007, Sarwal was Oracle's senior vice president of systems management.  Oracle has not yet announced what position Sarwal will have at the firm.  In his place at VMware, the company has temporarily appointed Stephen Herrod, the senior vice president of research and development to take over Sarwal's duties.  

The unexpected change does not come at a great time for VMware as it moves to adjust to a new CEO and looks for new ways to compete with Microsoft and other competitors.

Stay tuned

Defying Rumors - Alcatel-Lucent Fills CEO and Chairman From Outside

Alcatel-Lucent ALTU (NYSE) surprised many by going outside the world's largest fixed-line telecommunications gear manufacturer to replace outgoing CEO (Patricia Russo) and chairman (Serge Tchuruk).  Last week rumors were rampant that the firm might make former COO, Mike Quigley, who at one time had been considered for the top position, as the new CEO (see earlier blog).  Instead the company made two very exciting picks.  The board picked former British Telecom CEO (2002 to June 2008) and Dutch national Ben Verwaayen.  For non-executive chairman the board chose former European Aeronautic, Defence and Space Company (EADS) co-CEO Philippe Camus.  Camus held the EADS job from 2002 - 2005.  He is also a co-managing partner of Lagardere since 1988, and since 2006 has been a partner at Evercore Partners, Inc.  According to a story by Rudy Ruitenberg for Bloomberg, 

(Verwaayen) boosted sales of business services to 7.9 billion pounds from 4.5 billion in six years as revenue from retail and wholesale services plunged.  Under Verwaayen, BT's sales outside the U.K. grew to 17 percent of the total from 8 percent in fiscal 2002.

... Verwaayen has the advantage that he has been the CEO of a network operator, so he knows what Alcatel-Lucnet's customers want," said Exane BNP's Peterc.

Camus when he was with EADS managed to bring a number of different cultures together to make the high tech operation succeed.  He may be just the right person to do the same for the Alcatel-Lucent merger that has been faced with some of the same problems that EADS faced in relation to different corporate and personal cultures in one organization.  According to Peggy Hollinger who wrote a piece for the Financial Times,

Mr. Camus may well be placed to help reconcile the cultural differences.  As EADS

 co-chief executive he had to navigate often difficult relations between the French and German shareholders, which exploded into acrimony after his departure.

The new duo are already working on ways to fix the troubled telecom manufacturer.  According to Jennifer L. Schenker of Business Week  in a blog today,

During our discussion, Verwaayen mentioned a five-point plan he has already worked up to fix Alcatel-Lucent.  Among the key ideas: greater embrace of so-called "open innovation," an emerging management concept also practiced by companies such as Philips, that aim to do away with the most "not-invented-here" syndrome in corporate R&D.  Instead, companies partner--sometimes even with their rivals--on development of key technologies, and look to startups that may have fresher ideas than the stuff coming out of in-house research labs.

... Healing the company's wounds will take time, but Verwaayen has a long track record of winning over employees and creating a sense of common purpose.

While the task ahed for these two top executives is fraught with problems, the choice to pick them was terrific.  Stay tuned for an interesting ride.

For more:

The Deal.com

New York Times

Barron's Tech Trader Blog

Associated Press

Guardian

Silicon.com

Telecom UK

Reuters