Recommended Reading - Citigroup Shares Plunged as Shareholders Suffered 'Figurehead'

Lisa Kassenaar wrote an insightful piece for Bloomberg (December 29th) that examined how corporate boards, even in the era of Sarbanes-Oxley, have often failed to live up to their responsibilities.   Kassenaar wrote,

As the credit crisis gripping the global economy stretches into a third year, corporate directors are facing a storm of scrutiny for the instances when they’ve failed to show up — to sound the alarm as imprudent investments piled up at Citigroup or Bear Stearns Cos., for example, or to right the strategy at General Motors Corp. as the company was losing touch with car buyers’ tastes and burning through cash…

… Nell Minow, who has been agitating for better corporate governance for two decades, says directors remain too friendly with their executives. Minow, who founded the Corporate Library, a research group in Portland, Maine, wants companies to make it easier to replace directors by giving shareholders a vote on every board member every year.

The gist of the piece is a battle remains between corporate governance advocates and shareholders versus executive management and boards.  Read the piece for yourself and make up your mind on what side you stand.  I remain in Minow’s corner.  It is likely the new Obama administration will implement new regulations upon boards and management that come closer to corporate governance advocates.

Recommended Reading - The CEOs You Don't Know, Forbes

Matthew Kirdahy wrote a piece in Forbes yesterday that examined a number of highly successful CEOs not generally covered by the financial press.  Kirdahy focused on eight CEOs:

John B. Hess, HessJohn B. Colson, Quanta Services  Robert Parkinson, Baxter International   David A. Smith,  PSS World Medical  Richard Leeds, Systemax  Paul Dykstra, Viad  Dean Foate, Plexus  William Sullivan, Agilent Technology  

The CEOs listed and their companies are worth a quick read.

Recommended Reading - The fallen giants of finance, Financial Times

Yesterday the Financial Times ran an interactive audio/video piece on the many financial CEOs that took it on the chain over the last year.  It's a sad piece but worth a quick look-see.

Recommended Reading - What Makes the Best CEOs? Mergers Can Help., Deal Journal

Heidi Moore wrote a piece in today’s Deal Journal in which she examined the assessment of a number of top CEOs for their management and deal making skills.  Moore’s piece focused on a number of other articles recently written by academics, her own colleagues at the Wall Street Journal and management gurus who have separately assessed a number of the top CEOs. Check out the story or least take a look at the CEOs mentioned.

Recommended Reading - Klause Kneale on Chief Executives, Forbes

Klaus Kneale has written a brief apologist piece in Forbes on chief executives and the particular problems they and their companies currently face.  According to Kneale,

The title of chief executive has become fraught with peril. All blame, no reward. Every chief executive, good or bad, is overpaid. (According to whom? Everyone, apparently.) Grabbing the reins of a distressed company will be a sure-fire way to get publicly villainized and possibly sued. Turnaround artists who are chief executive candidates will ask, “Can I have the same powers and responsibilities but a different job title?” No.  

Check out the short piece, it’s worth a quick read.  While I don’t personally agree with Kneale’s conclusions I have found it useful to read how he views their role.

Steve Jobs - Maybe he is not indispensable to Apple

The recent news from Apple that Steve Jobs has issued a last minute cancellation of his keynote at the upcoming MacWorld event stirred new speculation on his health and what it might mean to Apple.  Rather than explore Jobs’ health status for which I have nothing new to bring to the issue, the real question remains what it might mean for Apple should he leave.  While many people have viewed the loss of Steve Jobs as Apple’s CEO as near cataclysmic, Justin Scheck and Neal Wingfeld of the Wall Street Journal wrote a piece that was far more circumspect over the consequences of Jobs leaving the company.  According to the story,

What if that situation does change? There is reason for optimism, based on the evolution of the team that develops Apple’s hardware, software and services, some people familiar with the company’s internal workings say. Some of them believe the group is now strong enough that, barring an exodus of top talent, the company could keep churning out innovative products without Mr. Jobs.  

Mr. Jobs did not respond to a request for comment…. 

In one possible sign of confidence in the management team, an unprecedented number of executives presented during the company’s press event to unveil its new MacBook lineup in October, though Mr. Jobs still dominated the event. 

… Mr. Crow contends that Mr. Jobs has now hired or elevated enough people whose product vision mirrors his that the company could continue to thrive. Mr. Ive is particularly in tune with Mr. Jobs’s thinking, he notes. Mr. Jobs’s sensibilities are also so deeply ingrained in lower-ranking designers and engineers that “a lot of people there will say ‘gee, what would Steve think about this,’ when Steve really isn’t thinking about it,” Mr. Crow says. 

Rick Devine, an executive recruiter in Silicon Valley with Devine Capital Partners, thinks Apple could continue to thrive in a post-Jobs world, predicting that the company will depend more on execution in the coming years than the kind of radical reshaping Mr. Jobs engineered over the past decade. Mr. Devine helped recruit Tim Cook, now Apple’s chief operating officer, to the company more than a decade ago.

 The authors make a good case for further success at Apple even without Jobs as long as key management talent remain.  To get the full story check out the entire article.

For more:

GigaOm

Yahoo CEO Speculation Continues Unabated

Yahoo’s CEO guessing game to replace Jerry Yang continues unabated.  First it was Jon Miller of AOL, then Arun Sarin, former CEO of VodaPhone, and on and on.  According to Nicholas Carlson of Silicon Alley Insider the latest name to resurface is John Chapple, the former Nextel CEO and ally of Carl Icahn.   According to Carlson,

Everyone we’ve talked to recently is betting on former Nextel CEO John Chapple, who joined the board with Carl Icahn in August. 

Unless Yahoo/board has a potential deal in place, I am skeptical of Chapple’s chances for the position.  I anticipate a surprise appointment.  Stay tuned.  

For more:  

Bloomberg  

India.com  

All Things Digital Boomtown   

Silicon Alley Insider  

Barron's Tech Trader  

Recommended Reading - Good Riddance to the Imperial CEO, Business Week

I recently came across an October 28, video/text story from Business Week given by Professor Edward E. Lawler III from the Marshall School of Business at the University of Southern California.  Lawler recently published a book called Talent.  In the Business Week piece Lawler focuses specifically on the issue of leadership.  He takes to task so-called imperial CEOs.  In the story, Lawler refers to CEOs who,

… make decisions and develop strategies with little input and discussion. Their decisions are above criticism and challenge. They adopt lifestyles that make them celebrities, and their companies become vehicles that make them “rock stars.” They are supported by technology that is designed to keep them in touch 24/7. But in reality, most imperial CEOs are dangerously out of touch with the people they lead, particularly when it comes to the issue of strategy implementation and development. Often they don’t hear bad news until it is too late (witness today’s problems in financial firms).    

Strategies and business plans in human capital-centric organizations are likely to be successfully developed and implemented only if the individuals who have to implement them have had a say in crafting them. Even if a brilliant CEO or senior executive can craft a successful strategy without input, the issue of how it is going to be implemented remains. Without individuals throughout the organization having a say in what comprises the strategy and agreeing that it is the right one, it’s highly unlikely they will want to or be able to implement it.

While I am not in total agreement with Lawler’s assessment, anyone interested in the issue of executive leadership should at least listen to the brief video/audio Lawler presents on the Business Week site.  You might even want to read his book entitled, Talent: Making People Your Competitive Advantage. 

Recommended Reading - Carly Fiorina Op-ed in Wall Street Journal

Carly Fiorina, former chairman and CEO of Hewlett Packard, wrote an interesting editorial in today’s Wall Street Journal, entitled, Corporate Leadership and the Crisis, CEOs seeking bailout should be willing to resign.  According to Fiorina, 

In a fast-paced, hypercompetitive, technology-driven world, common sense, good judgment and ethics matter more than ever. The American people expect leaders to have sufficient wisdom and perspective to buck the crowd and defy conventional wisdom when necessary, even if it isn’t popular at the time. Quarterly earnings and share price cannot be the singular purpose of business or metric of success for CEOs. Shareholders are not the only constituency a CEO and board serve. Businesses have equally important obligations to employees and customers. A CEO’s job is to balance the competing requirements of all of these constituencies.  

Business has an important role to play in rebuilding confidence and restoring credibility. To strengthen accountability, boards should put all aspects of CEO pay up for shareholder vote on an annual basis. Clawback provisions, which require a CEO to return compensation to shareholders if promised results aren’t delivered following their departure, should be included. CEO pay should be based on a balanced scorecard that reflects customer satisfaction and investment in employees, in addition to achievement of financial goals

Every board seat should be voted on annually and board membership should be regularly refreshed to ensure that tough questions continue to be asked. And when CEOs go to Washington and ask for taxpayer money, they should also be prepared to submit their resignations and those of their boards. To earn a bailout, a CEO and board should be held accountable for the decisions they’ve made — or perhaps the actions they’ve failed to take.  

Fiorina, who I am not a fan of, has defined a number of proposals the new administration should take under advisement and consider implementing as we move further into the ongoing financial/credit crisis.  Please read her entire editorial, she has a number of very worthwhile ideas to consider.

Should Rick Wagoner, GM's CEO, stay or go?

Tuesday afternoon Mitch Albom, the writer and radio talk show host (760 WJR AM out of Detroit), interviewed Mark Phelan, a reporter for the Detroit Free Press, and myself on whether or not Rick Wagoner, General Motors’ CEO should be forced out.  The interview took place while the U.S. Congress was considering bailing out the Big Three.  I was in favor of Wagoner’s removal and have been for over one year while Mr. Phelan contended he should stay.  If interested, check out the debate.  

Recommended Reading - Rescue Memo to Vikram Pandit, NY Times Dealbook

Paul Pendergast, who writes under the name of Jack Flack, wrote a memo in today’s New York Times Dealbook entitled Rescue Memo to Vikram Pandit.  The memo is a worthwhile read outlining clever ideas on what Pandit needs to do to save his job.  According to the author,

… if you want to avoid hearing Gasparino (CNBC reporter) speculating on behalf of your critics every couple of weeks, you’ll need to make sure you manage perception as well as you manage reality. Unfortunately, you’re not particularly good at that, which is actually a common affliction among strong analytical thinkers like you. 

Flack goes on to outline a number of key areas Pandit needs to focus on:

Be yourself …, 

Stop not-apologizing …,  

Define the model …,  

Push a real purpose …,  

Steward publicly …,  

Forget internal …,  

Manage Bob…   

If you follow Citi or are interested in the plight of financial CEOs, the memo is a must read.

CEO Watch, Rick Wagoner, GM, Update 10

It has been close to one month since my last warning on the possibility that Rick Wagoner, GM's CEO,  may be forced (and I contend should) to take a permanent vacation from General Motors.  According to stories in the press the pressure increased on GM to force Wagoner out if the firm is to get a government bailout.  According to a story by Gregg Stoll and Greg Hitt in today's Wall Street Journal,

On Sunday, Sen. Christopher Dodd (D., Conn.), a supporter of emergency loans for Detroit, suggested Mr. Wagoner should go if the government follows through and provides billions of dollars to help the auto giant restructure and return to profitability.

"I think you've got to consider new leadership," the senator said on the CBS talk show "Face The Nation." A Dodd aide said later the senator's demand for change would not be a "condition written into the" rescue package coming together on Capitol Hill, and draft legislation prepared by top Democrats doesn't make that explicit requirement. But Mr. Dodd's displeasure was clear. "If you're going to restructure, you've got to bring in a new team to do this," he said. "I think [Mr. Wagoner] has to move on."

...In a statement, a GM spokesman said the company "appreciates" Sen. Dodd's comments but added GM's employees, dealers, suppliers and its Board of Directors "all support Rick Wagoner and are confident he is the person to lead GM through these difficult times."

But calls for Mr. Wagoner and others to step down appear to be growing. In a statement from his office Sunday, Sen. Charles Schumer (D., N.Y.), said that, "while it can't happen tomorrow because of the urgency of the companies' financial situation, I would like to see management changes as part of any restructuring."

On Sunday, Jerome B. York, an adviser to billionaire investor Kirk Kerkorian who served as a GM director in 2006 when Mr. Kerkorian owned a stake in the company, called publicly for sweeping change at GM.

"Aside from a failure of leadership at the most senior executive management level, GM has five long-serving directors who have been on the board 10 years or more," Mr. York said in a telephone interview. "They have approved of and overseen many of the moves that have contributed to the company's troubles. They should also resign."

We will just have to wait and see how this all plays out.  Unfortunately, it is very late in the game to be considering new management but at a minimum it's a start.  Of the big three Wagoner has to be the first to go.  Mulally at Ford has shown he understands the situation and has made a start at turning Ford around. 

For more:

Globe and Mail (12/10) AP Story

AP (NPR Marketplace)

Portfolio.com

Reuters

The Deal.com

Jalopnik

Auto News (video)

U.S. News and World Reports

Unemployment Soars as Executive Turnover Slows

Rex Nutting of MarketWatch reported today that according to a survey by outplacement firm Challenger, Gray & Christmas November layoffs were up 148% compared with a year earlier.  This dramatic number contrasts sharply with Liberum’s latest report on executive turnover numbers for November 2008.  Liberum found that executive turnover actually declined in November when compared with the same time frame in 2007.  CEO changes declined 32%, CFO changes declined 46%, all C-level changes (from board of directors down to VP level) declined 39% and board of director changes declined 39%.    

As corporations continue major layoffs of mid-managers and blue collar workers most executives running public corporations have so far managed to keep their positions of authority.  Liberum expects the surprising divergence in executive turnovers from what has been happening to general workers employed by corporations to shift as we move into the winter and spring months.  As the recession takes a greater bite out of the economy, shareholders and even corporate boards can be expected to rachet up the pressure on executives to improve their performance and that of their companies or face the loss of their jobs. We anticipate the level of executive turnovers will begin to increase in February.  

Recommended Reading - Boards Go Global, Buinsess week Management IQ blog

Jena McGregor wrote a fascinating piece on Business Week’s Management IQ blog yesterday on the growth of international members on corporate boards.  McGregor examines the issues surrounding the idea both pro and con.  She writes,

In an attempt to diversify, boards have long sought to add women or minorities to their ranks. But as U.S. markets slow and global revenues become more critical than ever, they’re increasingly seeking foreign members or directors with significant international know-how. “It’s an emerging area,” says National Association of Corporate Directors president Kenneth Daly. “There’s a lot of interest in foreign companies having U.S. directors as well as U.S. companies wanting foreign directors.” Bart Friedman, a partner with Cahill Gordon & Reindel, who advises boards on governance matters, says he sees the interest doubling each year. “I’m not aware of a board that hasn’t at least thought about the issue.”

The blog is very worthwhile read for anyone interested in the corporate boards and how they can be helpful to a company’s success.  Check it out.

For more:

Reuters

Recommended Reading - Putting a Value on a C.E.O., NY Times Dealbook

Andrew Ross Sorkin wrote a terrific column today in the New York Times Dealbook.  His piece provided a brief but incisive  overview of the issues surrounding the controversy over CEO pay and performance.  Sorkin starts off the column asking why Vikram Pandit, Citigroup’s embattled one year old CEO, should remain in his position.  According to Sorkin,

Many Americans, including many people on Wall Street, would argue that an executive with a record like that (referring to Pandit) should get paid little or nothing.  

The reference to Pandit related more to the problem than Pandit’s actual circumstances or his own opinion on what should take place with regard to Pandit.  In the piece Sorkin goes on to review what many of the specialists in the field think and what options exist for improving the problem.  If you are at all interested in executive compensation and performance check it out.