CEO Watch List - Robert Kelley, Bank of New York Mellon

obert Kelley, the CEO of Bank of New York Mellon, who at one point was speculated to be a candidate to replace Ken Lewis as CEO at Bank of America, apparently may finds his own position at risk. Kelley, whose candidacy for the Bank of America CEO position was a frequent on-off affair, was ultimately forced out of consideration for the BofA position, according to a number of analysts, when news came out that he would need to get an exorbitant deal to take the job at Bank of America. There was no way in this current atmosphere that BofA would have been able to move forward with a large compensation/buyout package. Now according to story by American Banking News,

… many are questioning Kelly’s commitment to Bank of New York Mellon, since a lack of pay restrictions might have catapulted him to Charlotte. BNY Mellon spokesperson Rob Gruendl commented that “Bank of America pursued Bob Kelly and they never really got close.” However, this should not ease the concerns of investors. Bove rhetorically asks “Is he here for the duration or will he jump if some other institution, not as influenced by the government, meets his price?”

I have placed Kelley on the CEO Watch List but remain skeptical his position at Bank of NY Mellon is truly at risk.

Recommended Reading - What Iceberg? Just Glide to the Next Boardroom, NY Times

Gretchen Morgenson, the New York Times’ well known business reporter has done it again. Sunday’s business section included a story by Morgenson entitled, What Iceberg? Just Glide to the Next Boardroom, in which she examined many of the board members that were pushed out of their positions after the financial crisis of 08′ and 09′ and how they managed to get new board positions elsewhere. One would assume this is exactly the kind of circumstance that would not occur but it did.

Three large public companies provide excellent examples. They are Sunoco, the oil company; Paccar Inc., a truck manufacturer; and Tetra Tech Inc., a management consulting and technical services concern. Each of these companies has two directors who, until recently, were on the boards of institutions that were centrally involved in the mortgage meltdown.

… The main reason for director dysfunction is that board members have little fear of being fired for incompetence or sleepwalking through meetings. Because of the way director elections are structured, board members can win their seats if they receive just one vote of support. And even if a majority of shareholders withholds support from directors at annual elections, the directors who are singled out are often allowed to stay.

Anyone interested in corporate governance must read the Morgenson story

Insight Enterprise, Inc. Appoints New CEO to Fill Vacancy

Insight enterprises, Inc. NSIT (NASDAQ), a distributor of computer hardware and software, pushed out its former CEO, Richard Fennesy, back in early September of this year (see earlier blog). Last week, the company finally selected a new president and CEO to take Fennesy’s place, Kenneth Lamneck. Lamneck will also join the company’s board. He will replace the current interim CEO, Tony Ibarguen who seemed to be hoping to get the position permanently. Prior to his new position, Lamneck was president of Tech Data America’s division. According to a story by Andrew Johnson for the Arizona Tech Republic,

Chief among his (Lamneck) tasks as the Fortune 500 firm’s new leader will be addressing internal operational challenges stemming from recent acquisitions and distractions from a major accounting restatement early this year.

The article goes on to quote the chairman and co-founder, Timothy Crown, from a phone conversation in which he referred to Lamneck’s previous work,

“By putting up good numbers quarter after quarter, . . . it gives me confidence that he’s the right guy for us,”

Appointing a CEO from the outside is the right move for Insight. It is very early to determine, however, whether Lamneck is the right guy. The Arizona Tech article mentioned a few analysts that question his specific expertise forInsight’s business approach and products.

The fact that most of Lamneck’s experience has been in IT distribution could be a challenge for the new executive, according to Matthew Sheerin, an analyst with Thomas Weisel Partners in New York.

Unlike Insight, which typically sells hardware and software directly to businesses that use it, Arrow and Tech Data distribute technology to resellers like Insight or manufacturers that integrate components into finished products.

Lamneck faces real challenges in making his new position a success. According to Scott Campbell, who wrote a story for ChannelWeb,

Next year, Lamneck will also tackle starting up a hardware business in Europe, where Insight has a strong software presence after acquiring Software Spectrum. “I’ll be spending a good amount of time understanding how to address that. That’s a big opportunity and it’s an important part of the early agenda,” he said.

In addition, Lamneck faces hurdles trying to integrate Insight’s legacy product business with more value-added services, such as those picked up by Insight’s acquisition of networking solution provider and managed services provider Calence.

One thing for sure, Lamneck is eager to take on the challenge. Stay tuned.

BofA's Long Nightmare Maybe Over - Insider Moynihan Gets the Crown

While I have been in the camp pushing for an outside candidate to replace Ken Lewis as Bank of America’s CEO, the board finally has made a decision and went with inside candidate Brian Moynihan. Moynihan, who is currently the president of the bank’s consumer and small business banking, is very familiar with all the working parts of the bank and his ascension should make for a relatively smooth transition, a positive for the selection. Paul Davis of the American Banker wrote,

Moynihan has maintained a relatively high profile at B of A since joining the $2.39 trillion-asset Charlotte company in 2004 when it bought FleetBoston Financial Corp., where he was a top lieutenant to chairman and CEO Charles Gifford. Many observers said he appeared to be a frontrunner because Gifford and Thomas May, a former Fleet director, were on the committee charged with finding Lewis’ successor.

According to a piece in the Wall Street Journal’s Deal Journal a Citi analyst said,

He is also generally well liked by the investment community, and from our conversations with current and former BAC employees, he is consistently viewed by his peers as a very intelligent and strategic thinker.

Paul Davis wrote a story in today’s American Banker in which he quoted Anthony Polini an analyst for Raymond James Associates. Polini said,

… Choosing Moynihan appears to endorse the business model built over decades by Lewis and predecessor Hugh McColl Jr., including coast-to-coast retail banking and market leading positions in mortgage, credit cards, brokerage and investment banking. Moynihan was picked to run the investment bank in January following the ouster of former Merrill Lynch & Co. CEO John Thain.

“The selection says that while the economy and recession have been lousy, the board still believes that the company model is intact,” Polini said. “It is a vote of confidence for the strategy.”

Moynihan has his work cut out for him. While the bank has managed to recently pay back the government for the TARP related money many difficulties remain. While the government will have to go along with the new choice, it is hard to imagine it was delighted with the board’s choice for an inside candidate. The new selection comes on the heel of the announcement that the vice chairman of Bank of America Merrill Lynch, William J. McDonough would resign.Stay tuned as it all plays out. There are likely to be more changes on the board and within the executive ranks.

GM's New Chairman Turned Interim CEO, Shows How to Take Charge

Ed Whitacre, GM’s chairman and now interim CEO, appears to be in the mold of Lee Iaccoca who took charge of Chrysler back when the government saved it the first time around. While Whitacre, a former head of AT&T, is no car guy like Iaccoca, he has quickly taken charge of the firm and instituted a number quick and major changes. He has already made a number of major changes in management, he has also been taking great strides to build up employee morale throughout the company. Automobile workers are beginning to get the sense there might be some light at the end of the tunnel. Today’s New York Times has a story by Bill Vlasic entitled, In the Changeover at G.M., a New Hands-on Attitude. Vlasic writes,

In his new role as chief executive of G.M. as well as chairman, a post he has held since July, Mr. Whitacre is focusing on shaking up the automaker’s famously bureaucratic culture by singling out individuals and giving them both the responsibility and authority to make things happen.

“The only place there was any really solid accountability here was right at the top,” said Mr. Whitacre, 68, delivering his blunt assessment of the corporate culture at G.M. in his soft-spoken Texas drawl.

“I want to make sure people understand that the responsibility for this company to be successful is not just with the C.E.O.,” he said. “It’s them.”

“My style is really just to say, ‘let’s get going,’ ” he added. “Let’s do something, let’s move, and let’s not be constrained by something that has happened in the past. Nobody is going to be fired for trying something new around here.”

Whitacre is showing CEOs around the country possible ways to make changes at companies faced with inertia and growing problems. His management style may have some inherent risks and his lack of automobile related expertise is a potential problem but he has shown what a strong and savvy CEO can do in a little amount of time. Stay tuned.

Unilever CFO Leaving After Less than One Year of New CEO in Place

Jim Lawrence, Unilever’s UL (NYSE) CFO is leaving the company. Lawrence, who was appointed CFO back in August of 2007, has chosen to resign his position. He leaves the job less than a year after CEO Paul Polman was put in place. Lawrence is one of many changes that have occurred in the executive ranks since Polman took the reigns of the firm. According to a story by Clementine Fletcher and Jeroen Molenaar for Bloomberg,

Lawrence, 57, chose to resign and won’t receive severance pay when he leaves at the end of 2009, spokesman Flip Dotsch said. The executive will keep his “significant” stake in Unilever, Dotsch said. His holding is worth about 14 million euros ($21 million), data compiled by Bloomberg shows.

Speculation has been around that Lawrence had hoped to get the CEO position. Whatever the reason, Polman has been making real strides to the company back on track to compete more effectively with its key rival Proctor & Gamble.The Bloomberg reporters went on to write,

The first reason for the departure is “probably personal, the second is probably because he wants to become a CEO,” said Marco Gulpers, an analyst at ING Groep NV in Amsterdam with a “buy” on the stock. “They go their separate ways in harmony, as I understand. I think his successor will be an outsider.”

Keep a close eye on who Unilever selects to replace Lawrence and also where he ends up and what he ends up doing.

For more:

Reuters

Times Online

Speculation is Growing on Possible GM CEO Candidates

Now that Ed Whitacre, GM’s chairman, has taken over as interim CEO and is moving at sprint speed to get GM back on track, speculation is beginning to arise on possible candidates to fill the CEO position. It was made public yesterday that Spencer Stuart, the executive search firm, will he handling the CEO search for GM. While a number of analysts think Whitacre as interim CEO might actually end up with the job, Randolph Gulian, evp/general manager for recruitment process outsourcing and executive search for Allegris RPO, in an interview with the Deal.com has come up with a number of very unusual but possible candidates. During the interview, Gulian mentioned Mark Hurd, HP’s CEO and General Electric’s John Rice. While neither of these men may actually be candidates the possibility of someone big from outside the automobile industry may just be the way to go. Check out the entire interview, Gulian seems to be on to something.

GM Update: It's official - Henderson out, Time Magazine's Alex Taylor III Explains Why

Alex Taylor III wrote a brief story for Time on GM’s surprise announcement that Fritz Henderson was out as GM’s CEO and Ed Whitacre, GM’s chairman would serve as interim CEO until replacement is found. Taylor was right on the mark in his explanation. IN the story he wrote,

Henderson will be remembered as being as smart and experienced as any GM CEO, but he appeared tone-deaf when it came to listening to Whitacre and the rest of his board of directors. Since he had no role in picking them and they owed him nothing, that proved to be a fatal mistake.

When the board made it clear that it wanted Henderson to replace chief financial officer Ray Young, Henderson dawdled. He could rightly complain that government curbs on executive pay made it difficult to recruit experienced financial executives, but it must have looked to the board as if he couldn’t make a decision or was simply stalling.

Check it out, it’s worth the read.

For a bit more read:

Slate

Not Official - Fritz Henderson, GM's CEO to Resign

The internet is abuzz with rumors that Frederick “Fritz” Henderson, GM’s CEO who took the reins after GM’s longtime CEO Rick Wagoner was forced out, is about to resign. The rumor is yet to be confirmed but appears quite plausible. According to CTV News Chairman Ed Whitacre, Jr. will serve as the interim CEO until a replacement is found for Henderson. Let’s hope GM selects someone innovative and ready to go. While Henderson was a vast improvement over Wagoner he has still not shown the kind of leadership necessary to take the new company out of the abyss.

Recommended Reading - Making Sense of Leadership, ReputationXchange.com

ReputationXchange.com’s author, Dr. Leslie Gaines-Ross, had another insightful piece today on leadership. She examined the specific difficulties leaders particularly CEOs have today as compared in the past. Her blog piece focuses on the latest issue of the Economist’s World in 2010. Dr. Gaines-Ross focused specifically on an article in the Economist authored by Carol Bartz, Yahoo’s new CEO, on leadership. The article entitled, Leadership in the Information Age according to Dr. Gaines-Ross was full of useful advice. There was one section of the Bartz article that Dr. Gaines-Ross quoted that I thought was especially insightful and worth reading.

How are leaders expected to lead when they are on stage for everyone to throw tomatoes or applaud madly? Bartz suggests that the old model of command and control is obsolete. Leaders have to change direction and be able to explain this new world order to those around them. To make that happen, she suggests listening carefully to employees. Leading from the bottom up. Second, she recommends finding the thought leaders within your organization. Why? Bartz says: “But equally pressing is finding those employees who, though perhaps not the best managers, have the ability to digest and interpret information for others. Grooming these in-house ideas people helps foster a culture of openness to fresh thinking—the greatest energy an organization can have.” Leaders need to lead by ideas, not by force of power. Products and services alone are not enough.

Readers interested in leadership, should read the entire Economist piece as well as the short blog by Dr. Gaines-Ross.

Recommended Reading - CEO Blandness Banned, ReputationXchange.com

Dr. Leslie Gaines-Ross, who writes the ReputationXchange blog and Weber Shandwick’s chief reputation strategist, put together a clever blog post today on the need for visionary CEOs. She focused on the need for leaders (CEOs included),

… to step out of the shadows and speak up.

She goes on to briefly discuss a recent article in the Economist entitled, The cult of the faceless boss . The article,

… advises leaders to be bold, not bland. In another line that hit home, the writer says: “These are people who have created the future, rather than merely managing change, through the force of their personalities and the strength of their visions.” Less managing and more leading.

While not fully in favor of celebrity CEOs, I do agree that CEOs must lead by example and remain vocal to help their companies, guide their employees and work to improve the overall reputations of leaders which has been so damaged over the last few years. Check out the ReputationXchange blog.

Recommended Reading - CEO Swap, The $79 billion plan, Fortune

Jennifer Reingold wrote a story for Fortune on the ’science’ behind the CEO succession process that recently transpired at Procter & Gamble. I wrote an earlier blog praising the process at P&G but Reingold has managed to go into the process with just a bit more depth. According to Reingold,

It is something strange in this era of failed leadership, abysmal succession planning, and dueling egos: a transition atop one of the world’s largest and most successful companies that is notable for what’s gone right.

Like just a handful of other companies, including PepsiCo (PEP, Fortune 500) and General Electric (GE, Fortune 500), P&G (PG, Fortune 500) has seen its ability to groom top talent as a competitive advantage — as much of one as its trademark on Tide or patent on Pampers. Although the company is 172 years old, it has had only 12 chief executives, all insiders, and among them two family members.

Check it out.

Marks and Spencer Hooks Big Fish for CEO

Marks & Spencer’s MKS (LSE) well known CEO Sir Stuart Rose, who has been instrumental in turning the fortunes of the British clothing retailer around, will officially be replaced next year. The company has been working on a CEO search for nearly two years. Rose was even on my CEO Watch list back in September 2008. M&S selected Marc Bolland ,the highly regarded CEO of supermarket group William Morrison Supermarkets PLC, as it new CEO. Bolland is a real catch for M&S and a serious loss for William Morrison. According to a story by Sarah Shannon for Bloomberg,

Bolland joins M&S as the company seeks to restore same- store sales growth after two years of decline. He spent three years as CEO of Morrison, restoring profit after the 2004 purchase of competitor Safeway led to the company’s first-ever loss. M&S gets close to 50 percent of sales from food.

“To get someone with credibility in place is a huge positive,” said Paul Mumford, a fund manager at Cavendish Asset Management who holds Marks stock. M&S’s food division has been “suffering” from cheaper-priced supermarkets and Bolland will “help them move towards winning back market share.”

… The appointment “removes the uncertainty that’s been hanging over the stock for some time,” according to Mumford.

… “He brings a wealth of consumer marketing experience and has made a great success of his time at Morrisons,” Rose, who will remain as M&S’s part-time chairman, said in the statement. Rose will stay on to “ensure a smooth transition,” the retailer said, and will leave as planned by July 2011.

Bolland’s selection is a real feather in M&S’s hat. Despite the long amount of time it took to find a CEO, Bolland has many of the qualities M&S needs as it moves forward. According to a story by James Davey and Mark Potter for Reuters,

Bolland is widely regarded as having delivered a successful turnaround at Morrisons. Previous to that job he was chief operating officer at Heineken (HEIN.AS) based in the Netherlands.

… He took the reins from Ken Morrison, son of the founder and a major shareholder, and showed the kind of diplomacy he may need during what could be a period of powersharing with Rose.

Rose said the handover period would be about six weeks.

Ignoring some analysts’ calls for him to sell off Morrison’s food manufacturing operations and invest in non-food ranges, Bolland stuck with the group’s traditional “Market Street” format of fresh food counters and gave it a makeover.

Combined with innovative promotions and new product ranges, he transformed Morrison into the fastest growing of Britain’s top four food retailers for most of the past two years.

Bolland’s greatest risk as M&S’ new CEO is his lack of clothing expertise. He seems to be a quick learner and I would expect he will rely on his team to help him come up to speed. Stay tuned.

For more:

Wall Street Journal

Management Today

ICM

IB Times

UK Guardian

Recommended Reading - Why 'say on pay' won't work - Fortune

Colin Barr wrote a fascinating piece for Fortune on why investors, particularly institutional investors, will not restrict top executives’ salaries. According to Barr,

Waiting for investors to slam the brakes on runaway executive pay? Don’t hold your breath. Although Congress may give shareholders more of a say on pay soon, big money managers seem content to keep their mouths shut.

…The biggest investors — institutions such as mutual funds and pension funds that hold more than half of all shares — have shown little interest in playing pay watchdog. And it’s not clear that will change even if the government mandates say on pay as part of the financial reform taking shape in Washington.

“We just haven’t seen a huge amount of effort being put out by institutional shareholders to affect compensation levels,” said Bernard Black, a law professor at the University of Texas. “Whether it’s because they don’t mind the pay practices or because the money managers are making millions themselves, you don’t see them jumping up and down.”

… A recent study co-sponsored by a union pension fund and a top governance firm dubs many of the biggest mutual fund firms — including Ameriprise (AMP, Fortune 500), AllianceBernstein (AB), Barclays (BCS) and MFS — as “pay enablers” for supporting management pay proposals and opposing those by shareholders.

I highly recommend investors and corporate governance specialist read Barr’s piece.

EMS Technologies Makes Change at the Top

EMS Technologies EMLG (NASDAQ), the maker of software used in satellite and ground networks, on Wednesday announced the immediate resignation of Paul B. Domorski, as CEO and board member of the firm. In his place, the company selected Neilson A. Mackay, the company’s executive vice president and chief operating officer. The announcement came shortly after the firm’s stock suffered a 28% fall after the company announced a sizeable decline in net profits for the third quarter. According to a story by Peralte C. Paul for the The Atlanta Journal-Constitution,

John B. Mowell, EMS Technologies’ chairman, said the change is not because of the company’s recent earnings performance. The company reported last week it made a third-quarter profit of $5.3 million, down from $6.1 million a year earlier.

“It was a tough decision; it was not instigated by earnings,” Mowell said in an interview Wednesday. “This is not a reaction to an over-weakness on the part of Paul. He is a great leader, and he is a great man.”

The chairman then went on to state,

… the board opted to put Mackay at the helm because the company needs a leader with the technology and engineering background in addition to the business credentials.

It appears obvious that despite what the chairman said, the change was precipitated by the significant earnings decline and poor performance of the firm during the third quarter. The change from within may actually bode well for the firm going forward. Mackay has been with the firm for some time and understands the business. Domorski was not the only key change at the firm over the last number of months. Back in August , David A. Smith abruptly resigned as vice president and general manager of the company’s Defense and Space Division.Keep a close eye on the firm for the next couple of months.

Must Read - AIG's Benmosche Threatens to Jump Ship, Wall Street Journal

Anyone following top executives has to read today’s story by Liam Pleven, Serena NG, and Joann S. Lublin in the Wall Street Journal. The column is entitled, AIG’s Benmosche Threatens to Jump Ship. Benmosche, AIG’s hard charging CEO, appears to be exacting pressure on the AIG board and the Obama Administration.

At a board meeting last week, the strong-willed industry executive told fellow AIG directors that he was “done” but agreed to think it over after other board members reacted with shock, according to the people.

… It isn’t clear whether Mr. Benmosche would actually resign. In his short tenure at AIG, he has developed a reputation for making provocative remarks and ruffling feathers as he seeks to achieve his goals.

He has only been CEO for three months and continues to make waves. He has a little of AIG’s famous former CEO Hank Greenberg in him. Check out the story.

For more:

Altantic Wire

CNN Money

Crain's NY

Clusterstock

Suggested Reading - Subprime Leadership, ReputationXchange.com

Dr. Leslie Gaines-Ross wrote a clever piece in her blog ReputationXchange entitled Subprime Leadership. Dr. Gaines-Ross is the public relations firm Weber Shadwick’s chief reputation strategist. Her piece focused on a presentation David Gergen, the presidential consultant, current CNN commentator and Harvard professor, made at the Council of PR firm’s Critical Issues Forum the other day. If you are interested in CEO leadership or what it might mean to a company’s performance check out the blog or go directly to Gergen’s comments.

Recommended Reading - BofA Could Take Cue From Ford, IBM, thestreet.com

Dan Freed wrote a spot on piece for the thestreet.com on how Bank of America might consider replacing Ken Lewis as CEO. Freed thinks, and so do I, hiring a CEO from outside the bank and possibly outside the banking industry is good idea.

Bank of America’s board might do well to look outside the banking sector for a CEO to replace Ken Lewis, who will leave the post at the end of the year.

Certainly the strategy has worked for Ford Motor Co. which is in the midst of an impressive turnaround without having to rely on government aid as GM and Chrysler have had to do. The architect, of course, is Alan Mulally, who joined Ford as President and CEO in 2006 after a long career at Boeing Co.

Perhaps the best example of an outsider fixing a troubled company is Lou Gerstner, who had no experience in the tech industry when he took the top job at IBM (IBM Quote) in 1993. Gerstner, a veteran of RJR Nabisco and American Express (AXP Quote) is widely credited with saving the company, which was under threat from the rise of the personal computer.

Bank of America needs to find the right candidate rather than settle for someone willing to take on the challenge. Despite rumors of continuing difficulty in finding candidates from the outside, the board needs to redouble its efforts and make sure it diligently pursues a variety of potential candidates. We will just have to wait and see.

CEO Watch List - S. Sundaresh, Adaptec Update #1

Sundi Sundaresh’s reign as Adaptec CEO is looking more and more precarious. Steel Partners, an activist investor/shareholder, is claiming to have the votes to get him dismissed. Steel Partners has been working for more than a year to make management changes at the firm. According to a story by Chris Mellor in the UK’s Register,

AP is now reporting that Steel Partners claims it has amassed enough proxy votes from shareholders to boot Sundaresh off Adaptec’s board. The board says it’s waiting for certification of the votes cast before ceding or claiming anything.

If Steel Partners is certified as having sufficient written consents from shareholders then Sundaresh better pack his CEO bags, as can the anti-Steel Partners board members. Adaptec faces having a new CEO, probably an interim one, and a new board that will quite rapidly announce a new strategy aiming at getting Steel Partners a return on its Adaptec investment.

Stay tuned as the answers start rolling in on Sundaresh’s fate as well as that of the firm.

For more:

Steel Partners Press Release

Recommended Reading - SEC Targets CEO Succession Plans - New Risks for Boards, Says Heidrick & Struggles

Heidrick and Struggles, the high end executive recruiter and consulting firm, put out a press release today entitled, SEC Targets CEO Succession Plans - New Risks for Boards. According to the firm’s release,

“There is a whole new level of risk for corporate boards that could stem from the SEC’s legal bulletin this week, ushering in a sea change in how directors will view CEO succession planning,” says Stephen Miles, Vice Chairman of Heidrick & Struggles and Managing Partner of the firm’s leadership advisory services.

The release goes on to examine what companies might need to do to respond to the SEC legal notice that came out October 27th. While Heidrick and Struggles might have a point about the risks companies face with regard to the notice, the reality is companies functioning properly with regard to CEO succession have little to be concerned with. Company boards should stay on top of the SEC notice.

Praise for BP's CEO

Tony Hayward, the CEO of oil giant BP, deserves credit for BP’s latest performance. According to breakingviews.com in the New York Times,

The worst may be over for the major oil and gas companies, if BP is any sign. The oil giant’s profit almost halved in the third quarter from 2008. But the drop was less than investors feared and income rose from the preceding quarter. Tony Hayward, the chief executive, can take as much credit as the recovering oil price for BP’s performance.

Hayward took over the CEO post at BP back in May 2007 after BP’s CEO at the time, Lord Brown, resigned after a legal injunction was lifted that had prevented publication of details about his private life.

Recommended Reading - Bank of America Bumps Into Hurdles in CEO Hunt, Wall Street Journal

The never ending saga of Bank of America and the search for Ken Lewis’ replacement continues. According to a story by Dan Fitzgerald and Joann S. Lublin for the Wall Street Journal,

Bank of America Corp.’s search for a new CEO has slowed as directors sift through outside candidates that are in short supply, according to people familiar with the process.

Check out the entire story.

For more:

NY Post

Dealbreaker

Dealscape

Bloomberg

Charlotte Observer

CEO Watch List - S. Sundaresh, Adaptec

Adaptec’s ADPT (NASDAQ) CEO, S. Sundaresh, has come under increasing pressure. Adaptec creates hardware and software to manage, protect and store digital data. Last week on October 22, RiskMetrics Group and Proxy Governance Inc. pressed for the removal of Sundaresh as Adaptec’s CEO. The pressure ratcheded up today when Steel Partners, the activist hedge fund and large shareholder in the company, continued its push to get Adaptec shareholders to follow suit by signing what is known as the White consent card. Steel Partners put out a press release today over Business Wire that was included in a Reuters link. Adaptec continues to fight back to try and stop the Steel Partners push. Back on October 6, Adaptec put out its own release to counter the arguments being made by Steel Partners.

Keep a close eye on how this all plays out. Activist investors are beginning to raise their heads again.

Recommended Reading - CEO Pensions Encourage Earnings Games, Business Week Management IQ

Nanette Byrnes wrote a fascinating blog last Friday for Businessweek’s Management IQ. Her blog piece examined a study by Paul Kaltya of McGill University that looked at how certain CEOs have managed their respective company prior to retirement and what it has meant in relation to stock performance and the CEO’s respective retirement payouts. Byrnes wrote,

The study by Paul Kalyta of McGill University finds that a CEO whose retirement pay depends in part on the company’s performance in his final years at the helm, will manage earnings up as he approaches retirement. After he’s gone, the stocks tend to drop sharply.

By contrast, companies whose CEOs don’t have this type of provisions in their Supplemental Employee Retirement Plan, or SERP, don’t suffer similar spikes and drop offs.

Event-driven funds should take a look at the study as well as anyone interested in executive turnover and its potential impact on stock performance. The report can be found in the Accounting Review as pointed out in Ms. Byrnes piece.

Caterpillar Shows How Succession Planning is Done

Caterpillar CAT (NYSE) today announced its CEO succession plan for the retirement of current CEO, James W. Owens. The company has picked an insider, Douglas R. Oberhelman, to succeed Owens. According to the firm’s press release,

The Board of Directors of Caterpillar Inc. (NYSE: CAT) elected Douglas R. Oberhelman to the offices of Vice Chairman and Chief Executive Officer – Elect, effective January 1, 2010. Oberhelman, 56,

currently serves as Group President of Caterpillar with responsibility for the company’s engine and gas turbine businesses, human services, rail services and remanufacturing divisions

…. Announcing the succession plan at this time allows Oberhelman to concentrate on aligning resources for the future and defining critical success factors for Caterpillar’s leadership going forward. He will serve as Vice Chairman and Chief Executive Officer – Elect until the June 2010 Caterpillar Board of Directors meeting, at which time he will be elected Chief Executive Officer and a member of the Board of Directors, succeeding James W. Owens, 63. Owens will continue to serve as Chairman of the Board and Chief Executive Officer until July 1, 2010. He will remain as Chairman of the Board through October 31, 2010, when he will retire in accordance with the company’s long-standing mandatory retirement policy and be succeeded by Oberhelman at that time…

Expect a relatively smooth transition going forward. More firms need to take heed and examine what Caterpillar has done on CEO succession.

Immersion corporation CEO Resigns and Leaves Immediately

Immersion Corporation IMMR (NASDAQ) which develops hardware and software for simulating tactile experiences — such as the feel of an object or the jolt of an explosion during a video game — in order to enhance on-screen events saw its CEO, Clent Richardson, leave today. The company has been at risk of being delisted from NASDAQ. Just the other day NASDAQ,

granted an exception to Rule 5250(c)(1) of its listing standards to enable Immersion’s Common Stock to remain listed on NASDAQ while it completes its internal investigation and restatement of its historical financial statements.

Immersion has appointed former CEO, Victor Vegas as the interim CEO.

Keep an eye on the moves Viegas takes and who the board settles on to take the CEO position. There may be more here than meets the eye.

Recommended Reading- Steven Rattner: Why we had to get rid of GM's CEO, Fortune

Steve Rattner, the former car czar in the Obama administration who was directly responsible for forcing Rick Wagoner out as GM’s CEO, has written a piece in Fortune that is getting a great deal of coverage. In a word Rattner, who was not a car industry specialist, depicts GM’s management and Rick Wagoner as follows:

In my relatively few interactions with chairman and CEO Rick Wagoner, I found him to be likable, dedicated, and generally knowledgeable. But Rick set a tone of “friendly arrogance” that seemed to permeate the organization.

Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW.

It seemed completely obvious to us that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue. Equally important, GM’s February viability plan was more “business as usual” and not the aggressive new approach that we felt was essential.

There is nothing all that surprising in the story but rather it was just depressing. Let’s hope GM and other firms with similar problems can use the article as a means for making some real changes to make their respective companies and management more competitive.

Poor Earnings - CEO change?

Are we beginning to see some change in the top management environment? Throughout the current recession we have seen most public companies stay with their top management even as their firms continued to show weak results. Just lately, we have begun to see some companies that have fared poorly lately experience changes at the top. In my previous post, I examined the change at Nokia after poor performance. Now we have the announcement that Eric Claus the CEO of the Great Atlantic and Pacific Tea Company (known as A&P) GAP (NYSE) will be leaving his position immediately. Claus’ departure comes as the company’s performance continues to slide. While the change might not be considered a huge surprise it comes without a real successor ready to take Claus’ position. In the interim, A&P will be run by Executive Chairman and former CEO, Christian W.E. Haub. According to a story in the Wall Street Journal byKelly Nolan and Veronica Dagher,

Haub is also partner and co-CEO of Tengelmann Warenhandelsgesellschaft KG, A&P’s largest shareholder.

We may start to see more and more changes at the top of companies that fail to perform up to expectations.

For more:

Bloomberg

Marketwatch

APP.com

Recommended Reading- Update Bank of America's CEO search, Fierce Finance

Jim Kim of Fierce Finance provided a brief update on Bank of America’s search for a CEO to replace outgoing CEO Ken Lewis. Kim examines the latest news that Robert Diamond, Barclay’s CEO, took his name out of the running. He also reviewed the two internal candidates supposedly under consideration, Brian Moynihan and Greg Curl, two candidates I have already written about earlier and who I think should not be selected. Apparently according to Kim the buy-side community favors the appointment of an outside candidate. The article also provides a link to a video of CNBC commentator Charlie Gasparino discussing BofA’s search.

Poor Financial Results Usher in Quick Management Changes

Nokia NOK (NYSE) the once indomitable Finnish based wireless phone company just announced some management changes. Nokia who has found itself with an uphill battle in today’s smartphone era is battling Apple and many of the others. So far, its results have been nothing to brag about. In a story hat appeared on Newsvine,

The company said Timo Ihamuotila, head of global sales, will replace Rick Simonson as the chief financial officer on Nov. 1. Simonson will head the mobile phones sector in the devices unit.

Simonson has been CFO since 2004 and will continue to be on the executive board, Chief Executive Officer Olli-Pekka Kallasvuo said.

“After six successful years as CFO, it is great to have Rick move to such an important operational role,” Kallasvuo said. “Rick Simonson’s deep knowledge of the business and its financials will be valuable

for the significant part mobile phones play in Nokia’s business.”

These changes are surely not the end of the problems facing the company.

For more:

Barrons Tech Trader

Wall Street Journal

Bloomberg

BusinessWeek

CEO Watch Jeffrey Peek, CIT Update #2

Back in July, I placed Jeffrey Peek, CEO of troubled business lender CIT, on the CEO Watch list. Early today news came out that Peek, Chairman and CEO, would resign his position at the end of the year. Too often these days top executive changes take place very late in the game. Let’s see if CIT can find a way out of its troubles and bring in a leader that can help its circumstances. According to a story by Alan Rappeport for the Financial Times,

Peek’s resignation comes a little more than a month after CIT extended his contract by another year, signaling that he would lead the company through its restructuring. In his new contract, which was set to expire in September 2010, Mr Peek was prohibited from any compensation not permitted under the terms of the government’s troubled asset relief programme and lost the privilege of using the corporate aircraft.

Hopefully more companies will take a cue from CIT’s troubles and set in place succession plans and at a minimum, make management decisions more quickly when the circumstances require changes.

For more:

Bloomberg

NPR

WSJ Deal Journal

Recommended Reading - Who can fill the CEO seat?, Boston Globe

Todd Wallack, a reporter for The Boston Globe, wrote a terrific piece that appeared this morning on the search for a new CEO for Bank of America to replace Ken Lewis upon his retirement. Wallack examines the pressure to look for a candidate from outside the bank. He also mentions a long list of potential candidates from within the bank and outside. While much of this is a repeat of what has already been discussed their are some real nuggets of information in the piece. If you are interested in BofA, the story is a must read.

Suggested Reading - AIG's New CEO, American Public Media's Marketplace

Scott Jagow wrote a quick read piece on AIG’s new CEO Bob Benmosche for his Scratch Pad column on American Public Media’s Marketplace. Jagow manages to get the essence of how Benmosche in his short stay at his new position has managed to tweak so many. Below is just some of what Jagow mentioned.

… so far, he isn’t making many friends…

It started as soon as Benmosche was hired. His first action as head of AIG was to take a two-week vacation in Croatia. There, he told reporters he wasn’t in any hurry to repay the TARP loan by selling off assets too quickly. This didn’t go over too well with some members of Congress.

Then, he was quoted as saying that New York Attorney General Andrew Cuomo “doesn’t deserve to be in government.”

Let’s hope he ultimately does better with the company itself. Stay tuned.

Recommended Reading - Bank of America's top pick for a new CEO? The one who created this mess, BloggingStocks

Zac Bissonnette, a frequent contributor to BloggingStocks.com, wrote a spot on piece on the possibility (mentioned by the WSJ and Atlanta Business Chronicle) that Bank of America may select Gregory Curl, the bank’s chief risk officer, as an interim CEO. The interim CEO would serve until a permanent replacement is found for Ken Lewis upon his retirement. What is the bank (the board) thinking? This is the kind of trial balloon that should never happen. Curl was the chief risk officer at the time of the ill-fated Merrill acquisition. Stay tuned.

For more:

ClusterStock

Recommended Reading - Can Good Leadership be Learned?, The Atlantic

Lane Wallace ,a correspondent for The Atlantic, examined Alan Deutschman’s new book, Walk the Walk: The #1 Rule for Real Leaders. Wallace was pleasantly surprised at how insightful the book was. She wrote,

… Deutschman’s premise about the importance of management being authentic, honest, and not asking anyone beneath them to meet any standard or make any sacrifice they’re not prepared to meet or make themselves is clearly not as obvious or widely understood as I once might have thought. Take yesterday’s column by David Carr of the New York Times about the management at the Tribune Company arguing to a bankruptcy court–after leading the company into bankruptcy (in no small part because of a badly-conceived, heavily-leveraged purchase that left the company saddled with debt) and depriving more than 2,000 employees of jobs– that the managers should be awarded between 45 to 60 million dollars in performance bonuses. The bonuses are necessary, the company’s lawyers argued, because getting a company out of bankruptcy is hard work, and “not being rewarded for hard work and hard effort is demotivating.”

… Another point Deutschman makes is that a great leader has, in the words of Urban Meyer, head football coach at the University of Florida (where Tim Tebow plays), “the ability to make the level of play of everyone else around him better.” Again, a seeming statement of the ridiculously obvious. But consider this piece on Bank of America’s outgoing CEO (and former chariman) Ken Lewis, who announced last week that he was retiring–although he said he’d stay on through December because a successor wasn’t waiting in the wings. And why wasn’t a successor waiting in the wings? Because, according to the article’s author, Joe Nocera, Lewis “brutally fired many of the firm’s most talented executives, seemingly afraid to be surrounded by potential successors.”

The book appears to be worth a read.

Liberum Research - Third Quarter Executive Change Comparisons Show Declines

The overall unemployment figures continue to diverge with executive turnover figures compiled by Liberum. Liberum has just completed analyzing third quarter figures for executive turnover. The key totals showed a continuing decline in executive turnover for CEOs, CFOs and overall C-level management as compared with the same time frames in 2008 and 2007 (view graphs below).

• CEO turnover declined 23%, CFO turnover declined 36% and overall C-level turnover (from board of directors on down to corporate vice presidents) registered a 24% decline for the third quater of 2009 as compared with the third quarter in 2008. The decline percentages were even larger when compared with the 2007 third quarter.

Investors need to keep a close eye on specific executive changes as well as the actual trends.

CEO Watch Ken Lewis, Bank of America, Update #8

It's official, Ken Lewis, Bank of America's embattled CEO announced his planned resignation for the end of the year. Lewis in a letter to Bank of America employees explained his reasons for resigning. The letter included in the WSJ's Deal Journal stated that Lewis' decision to resign was his alone and that he was not pressured to do so. Whatever the reason, his planned exit is the end of a sad chapter at the bank and hopefully the beginning of a new era for the bank, an unlilkely scenario at this point.

Are executives Beginning to Find Themselves Back on the Hot Seat?

Liberum Research’s executive turnover numbers do not yet show an increasing turnover trend. There are, however, more and more specific situations where CEOs and CFOs are resigning as corporate performance has lagged. Just yesterday, Silicon Image SIMG (NASDAQ) the connector chip maker’s CEO, Steve Tirado, resigned after the firm announced its third quarter revenues were expected to be much lower. We are beginning to see more and more top executives leave their positions as their respective firms have failed to perform.

Biotech Terminates CEO and Others

The board of directors of Sequenom SQMN (NASDAQ) terminated the employment of the president and CEO, Harry Stylli and Elizabeth Dragon, the SVP of R&D after an investigation into the mishandling of test data. Sequenom a biotechnology firm involved in the development of a test for Down’s Syndrome acted quickly after the results of the investigation was completed. Other employees have been affected as well including the firm’s CFO. According to story in GenomeWeb Daily News,

The clear out comes following the completion of an investigation into the mishandling of R&D test data and results on the firm’s SEQureDx Down syndrome test. Sequenom disclosed the problems last April and opened an investigation at that time.

“While each of these officers and employees has denied wrongdoing, the special committee’s investigation has raised serious concerns, resulting in a loss of confidence by the independent members of the company’s board of directors in the personnel involved,” the firm said in a statement.

“In making the transition from researching potential molecular diagnostic tests to developing and commercializing those tests, the company failed to put in place adequate protocols and controls for the conduct of studies in the T21 program … and some employees failed to provide adequate supervision,” Hixson said during a conference call following the announcement. “This resulted in inadequately substantiated claims, inconsistencies and errors in the test data, and results for our T21 program.”

In a recent interview conducted by The Wall Street Transcript of Zarak Kurshid, a vice president for Caris and Company published on September 14, 2009, he said,

”We’re recommending selling Sequenom.”

According to a story by David Olmos for Bloomberg,

(The company’s) planned launch of a prenatal test for Down syndrome may be delayed by more than a year after a finding that research data gathered to develop the screen was mishandled.

Following the terminations and resignations the firm’s board according to its own SEC 8K filing,

… appointed Chairman Harry Hixson, a former president and chief operating officer of Amgen, and Director Ronald Lindsay to serve on an interim basis as CEO and SVP of R&D, respectively. The company’s board of directors also has designated controller Justin File to serve as principal financial and accounting officer.

There is likely more to come as the SEC is investigating the problems at the firm as well.

For more:

Marketwatch

Wall Street Journal

San Diego Union Tribune

Seeking Alpha (update 9/30)

Recommended Reading - CEOs and the Pay-for-Performance Puzzle, Business Week

Ben Steverman wrote a terrific piece in Business Week that examined the issues surrounding CEO compensation and what it means with regard to the quality and proficiency of CEOs. If you are interested in compensation issues or more importantly in CEOs and their impact on companies, it’s a must read.

Aeropostale CEO to Resign

One of few bright spots in the retailing scene Aeropostale ARO (NYSE), the teen retailer, announced today that its longtime CEO going back to 1996, Julian Geiger, would be stepping down at the end of the fiscal year (see press release). For now, the firm will replace Geiger with Mindy Meads, the president and chief merchandising officer, and Thomas Johnson, the chief operating officer, who will serve as co-CEOs. Both executives have performed terrifically at the firm. It is unlikely, however, the two will remain as co-CEOs for very long. Co-CEOs is usually difficult arrangement under normal circumstances but it is even more problematic in a retailing situation.Keep a close eye on how this all shakes out over time. The company does not want to damage a good thing.

For more:

MarketWatch

The Street.com

Businessweek (update 10/1)

CEO Watch List - Ken Lewis, Bank of America Update #7

Ken Lewis’ CEO chair at Bank of America continues to get hotter and hotter. It is getting more and more difficult to see how Lewis can manage to keep his position much longer. Joe Bel wrote a piece for MarketWatch Tuesday in which he stated,

The multiple probes bearing down on Bank of America Corp. could make it difficult for Chief Executive Ken Lewis to keep his job.

Numerous analysts and management experts are now predicting the when rather than the whether. Stay tuned.

Recommended Reading - Too Many No Voted to Be Ignored, The New York Times

Gretchen Morgenson, the New York Times business reporter, wrote another spot-on story in Sunday’s Business section on the need for ending what she calls the often “cozy relationships” between corporate board members and management. Morgenson’s story, Too Many ‘No’ Votes to be Ignored stated,

For years, shareholders have done little to voice complaints about such cozy relationships, but it seems that the financial fiasco of the last few years, and the lackadaisical performance by directors at major banks that contributed to the meltdown, is encouraging investors to become more vocal.

Signs of such a welcome development can be seen in the results of this year’s director elections at annual corporate meetings.

… Even with such thumbs-downs nearly doubling year-over-year, negative votes on directors still remain relatively small and suggest that investors have plenty of room for improvement if they want to make themselves heard.

… Investors are clearly angry with their companies, and they have their reasons. Director accountability to the shareholders they are supposed to serve has been sorely lacking for decades. Even as they rubber stamp risky corporate practices and excessive executive pay, directors continue to win re-election to their increasingly lucrative board seats.

Liberum has also been examining this issue over the last two years. Investors often need to be vocal about how they view management and the responsibilities of board members. Investors must also stay on top of specific board changes for they could mean a potential change in management or strategy. To get more information on the specific statistics Morgenson referred to in her story check out the study performed by Proxy Governance, Inc. entitled SHAREHOLDER VOTES OPPOSING DIRECTOR NOMINEES SHOW SHARP INCREASE IN 2009 PROXY SEASON.

LCA-Vision CEO Resigns for New Position

Steven C. Straus, the often time embattled CEO of LCA-Vision Inc. a provider of laser vision correction services, according to the company’s press release,

… resigned his position to lead another healthcare company outside of the ophthalmology industry. Management of daily operations will be the responsibility of Chief Operating Officer David L. Thomas and Chief Financial Officer Michael Celebrezze, jointly reporting to the board of directors through non-Executive Chairman E Anthony Woods.

Straus who has been CEO for three years has at times been under pressure from activist shareholders and subject to the weak economy. His exit from the firm may turn out to be a blessing if the company can find its way forward and put in place a CEO that understands the business and its market.Stay tuned.

For more:

Business Courier of Cincinnati

MSN Money

Northrop Grumman CEO to Retire with Succession in Place

Northrop Grumman NOC (NYSE) chairman and CEO Ronald Sugar will retire January 1, 2010. In his place the board selected president and chief operating officer Wesley G. Bush to run the defense contractor. Sugar, who has served as the company’s CEO since 2003, has been in charge of the firm as its value has continued to increase. Now that a new administration is in place and the U.S. economy has been under intense financial and economic pressures many defense industry firms have been working to move their operations more in line with the problems facing the United States economy. More consolidation and cost cuts can be expected over the next number of years in the defense industry. The selection of Wesley G. Bush allows for a smooth transition at the top of Northrop Grumman and the likelihood of a refocusing in the firm’s business strategy going forward.

For more:

Businessweek

Washington Post

WSJ

Bloomberg
Smartbrief (9/18)

Suggested Reading - Where the Jobs Are, Forbes

David Serchuk, a reporter for Forbes, wrote a story today that examined where the jobs are and where they are not. Serchuk also referred to recent research by Liberum in which we recently predicted executive turnover would begin to rise as the economy moves through the Fall and into the Winter months.

Coldwater Creek CEO Resigns, Replaced by Chairman

Coldwater Creek, Inc. CWTR (NASDAQ) the women’s retailer announced today that CEO Daniel Griesemer resigned and would be replaced immediately by chairman and co-founder Dennis Pence. He has also resigned his board position. Coldwater has been struggling, just as all other women’s retailers, during the current recession but has managed to control its inventory and stay within predictions by Wall Street. It is unclear exactly what forced the change at the top of the firm. Griesemer had been appointed CEO back in 2007. Investors should keep a close eye on the firm to get a better picture behind the change and what might be planned for the firm going forward.

For more:

Reuters

Corporate Press Release

Morgan's CEO Mack to be Replaced by Gorman in January

Late today it was announced that the often embattled Morgan Stanley MS (NYSE) CEO John Mack would be replaced in January by the firm’s c0-president James Gorman. Often considered Mack’s possible replacement, Gorman will soon be in the captain’s seat. Mack will continue as chairman. According to a Reuters story by Dan Wichins and Christian Plumb,

Morgan Stanley (MS.N) Chief Executive John Mack is stepping down and will be replaced by retail brokerage head James Gorman, signaling the storied bank is embracing stable businesses after losing big on risky ones.

… “Gorman has really earned his stripes,” said Anton Schutz, president of Mendon Capital Advisors in Rochester, New York, which owns Morgan Stanley shares. “He did a great job at Merrill, he’s doing a good job at Morgan Stanley, and the timing for a change seems to be good, because we’ve made it through the worst of the crisis.”

Many of the street’s analysts are convinced the change at Morgan is related to the issues of risk the bank experienced during the financial crisis and the change at the top is intended to ameliorate that risk going forward. It may be far too early to make that kind of the prediction, we will have to wait and see.

For more:

Marketplace

Wall Street Journal

Bloomberg

New York Times

Wall Street Journal

Insight Enterprise, Inc. Pushed CEO Out

Insight Enterprises, Inc’s. NSIT (NASDAQ) board Monday September 8 ousted its CEO, Richard Fennesy. Fennesy had been in charge of the firm since 2004. Insight, a distributor of computer hardware and software in North America, carrying thousands of products from major manufacturers, selected a current board member Anthony Ibarguen to serve as the firm’s interim CEO until a successor is chosen. According to Insight, Ibarguen has more than 25 years of IT industry experience including serving as President, Chief Operating Officer and a director of Tech Data Corporation (TECD). Additionally, he served Executive Vice President of Sales and Marketing at Entex Information Services. He also served as President and Chief Executive Officer of Alliance Consulting Group, a privately held IT consulting and software solutions firm.According to a story by Patrick O’Grady for the Phoenix Business Journal,

co-founder and Chairman Tim Crown during a conference call said …“It was with this focus that the board determined that now is the right time to make a change in the CEO position,”

… Crown said there is no one thing that led the board to decide a change of direction is in order, but the company has been buffeted this year having to restate about $61.2 million in earnings related to accounting for certain aged transactions. The restatement involved transactions going back to 1996.

The abrupt change at Insight may augur some positive results for the firm once the dust settles and the firm focuses its business strategy. Keep a close eye on the interm CEO’s moves and the firm’s ultimate choice for a permanent CEO.

CEO Watch, Jeffrey Peek, CIT Update 1

In July as CIT continued to risk bankruptcy I placed Jeffrey Peek on Liberum’s CEO Watch list. Earlier today it was announced that CIT extended Peek’s contract for another year. In a Reuters story earlier today by Juan Lagorio,

CIT Group Inc said it has extended the contract of Chief Executive Jeffrey Peek for one year, even though his decisions to expand into risky businesses helped to push the lender to the brink of bankruptcy.

… “Keeping him (Peek) on board would minimize any distractions as the company tries to complete its restructuring,” said Sameer Gokhale, an analyst at KBW.

… “Getting a new CEO at this point in time wouldn’t really accomplish anything because the company is dealing with funding, liquidity and capital challenges, and that is not something a new CEO can fix easily,” Gokhale said.

The circumstances surrounding Peek’s contract extension are somewhat similar to many companies today. Boards remain reluctant, particularly during difficult times, to change the “captain of the ship” even while the ship is sinking or floundering. Stay tuned.

For more:

Bloomberg