Recommended Reading - Why Good CEOs Make Bad Moves

Eric Jackson, the activist shareholder, who waged an earlier Internet campaign that helped bring down Yahoo’s former CEO, Terry Sempel, wrote a fascinating piece yesterday on Seeking Alpha.  Jackson focused his column on Sidney Finkelstein, the Steven Roth Professor at the Tuck School at Dartmouth College who is considered an expert on what makes for successful top executives.  Jackson briefly discussed Finkelstein’s earlier book, Why Smart Executives Fail and his newest book, Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You about to be released, and which he co-authored with Jo Whitehead and Andrew Campbell.    

Jackson went on in the piece to interview Finkelstein to get his take on the problems we are facing today and why CEOs and their boards have often failed in their responsibilities to shareholders and their respective companies.  Check it out, Finkelstein offers a number of enlightening assessments of today’s financial predicament.

Recommended Reading - Mastering management: managing in a downturn, FT

The Financial Times (registration req.) is running a fascinating and apropos Special Report on Managing in a Downturn.   The Report is broken into a series of parts.  If you are a manager or you are examining the management of a specific company the below stories are worth a read.

1. Time for managers to stand and deliver
   
2. Keeping the global economy afloat
3. Seizing the upside of a downturn
4. The perfect storm  
5. Managing fluctuations  
6. Japan: Hubris, denial and the loss of confidence  
7. Scandinavia: Failed banks, state control and a rapid recovery  
   
8. Lessons from the 1997 Asian economic crisis  
   

Check them out.  

CEO Watch - Ken Lewis, Bank of America

Ken Lewis, BofA's embattled CEO who was responsible for BofA's questionable acquisitions of Countrywide and Merrill Lynch is expected to survive today's BofA board of directors meeting.  According to the Wall Street Journal,

"Lewis's job is in no danger," a person close to the board said Friday.

Whether he survives or not Lewis will remain on the hot seat for some time.  While both major acquisitions were favored by the government, at a minimum Lewis has failed to manage them and deserves to be forced out.  Rob Cox and Anthony Currie of Breakingviews.com yesterday, which appeared in the New York Times, summed up Lewis' predicament and concluded,

Corporate executives must accept responsibility for failures if they’re to keep their shareholders’ trust. When they don’t, it is up to the board to make sure blame is apportioned appropriately. Lewis hasn’t come clean. BofA’s board must go.

I agree but suspect the prevailing view that Lewis will for now remain at his post are accurate. Stay tuned.  

For more:  

New York Times  

Bank Investment Consultant  

Bizjournals.com  

Bloomberg  

AP  

NY Post  

Charlotte Observer  

Clusterstock  

Forbes (update)  

Guardian UK (update 1/29)  

Charlotte Observer (update 1/29)  

CardioNet CEO Leaves

Cardionet BEAT (NASDAQ) the medical device company that provides a wireless method for diagnosing and monitoring cardiac arrhythmias announced that Arie Cohen, the president and CEO of the firm since November 2007, was leaving the firm to pursue other opportunities.  The announcement came shortly before the company’s conference call on quarterly earnings.  The company’s board announced that it’s executive chairman Randy Thurman would become the interim president and CEO.   The company has also initiated an executive search for a permanent replacement.  According to the company’s press release,

Thurman most recently served as Chairman and CEO of VIASYS Healthcare Inc., a global medical technology company that was acquired by Cardinal Health in June 2007 for $1.5 billion. From VIASYS’ successful IPO in 2001 to 2007, Mr. Thurman spearheaded an aggressive growth strategy that increased the Company’s revenues from $320 million to $700 million and positioned the Company to consummate twelve strategic acquisitions over a six-year period.   

… Prior to VIASYS, Mr. Thurman was Chairman of the Board and CEO of Corning Life Sciences, a diversified medical technology company with a focus in contract pharmaceutical research, contract biologic manufacturing and clinical diagnostic testing. Earlier in his career, Mr. Thurman was President of Rhone-Poulenc Rorer Pharmaceuticals Inc., a global, research-based pharmaceutical company. Mr. Thurman was named by Ernst and Young as Entrepreneur of the Year in healthcare technology in 2007. He is currently Senior Advisor to New Mountain Capital, LLC, a leading private and public equity investment firm.

For the moment the company appears to be in good hands.  Thurman is a consummate executive.  The question remains what exactly was behind the move by Cohen?  Was he pushed out, does he have a possible opportunity and, if so, why would it be better than his previous position at CardioNet?  Investors need to play close attention to the recent management changes at the firm. Back in late September 2008 The Wall Street Transcript interviewed Sara Michelmore, Managing Director & Senior Research Research Analyst in the medical technology group of Cowen & Company.  In the interview Ms. Michelmore discussed CardioNet.  According to Michelmore,

CardioNet is a company that makes a mobile, outpatient arrhythmia monitoring system. It competes with some older technologies like Holter monitors and event loop monitors. It’s a really neat technology, a very high end piece of device equipment, with very high end analytical technologies at their service center. They’ve got a good amount of momentum right now; it’s a large market opportunity for them, probably in excess of $1.5 billion. Their penetration currently, of the cases that they would go after, is 5%. In the last 18 months, they have made some significant commercial strides, expanded their sales force almost 4 times and have had some really strong momentum recently in reimbursement coverage. It’s currently covered by Medicare, although they are also probably going to have a new CPT code that goes into effect January 1, 2009. And they have had a significant amount of new, private, commercial payers get on board with that company as well. We like that one; we think it’s a neat story and a good management team as well.  

It is odd that Cohen would leave the company now to pursue another opportunity just as the US Government is getting close to possibly putting huge dollars into the healthcare system. Stay tuned.  

For more:  

SOA World  

Bizjournal.com

ING Group CEO Steps Aside

In a surprisingly worded press release ING Group ING (NYSE), the Dutch financial service firm, put out a press release today that announced the current CEO, Michel Tilmant, would step aside as CEO today.  The release stated,

… in light of the extraordinary developments over the past few months and given his personal condition, Michel Tilmant will step down from the Executive Board as of today. Michel Tilmant will be an advisor to the company until his retirement from ING on 1 August 2009.

Tilmant leaves his position as the company continues to struggle.  The firm would not only lose its CEO it has also lost nearly 7,000 ING employees.  This comes all on top of a fourth quarter deficit of nearly 3 billion Euros.  The announcements were highlighted in today’s UK Times Online.  According to a story by Dominic Walsh in the Times Online,

A spokeman for ING said that Michel Tilmant, 56, would be stepping down as chief executive because of the stress of leading the group through the most turbulent period in living memory. 

“It has taken its toll on him,” the spokesman said. 

The company has selected Jan Hommen, the current chairman of the supervisory board of ING Group, to be the new CEO.  Hommen’s selection requires the approval of a general meeting of the shareholders scheduled for April 27, 2009. Until his formal selection is approved, the company has placed Eric Boyer, a member of the ING’S Executive Board, as the company’s interim CEO.  At this point it is difficult to get a handle on what Hommen will bring to the table that will be different from what Tilmant had brought to the management table.  Stay tuned.  

For more:    

Guardian  

Investment Executive  

CNN Wire   

Forbes  

France 24  

Financial Week  

CEO Watch - Sir Howard Stringer, Sony

For the last number of weeks Sony SONY (NYSE) and its CEO, Sir Howard Stringer, have been in the news.  Most of the commentary has been about the impending reorganization of Sony’s electronics business Sir Howard hopes to get implemented.  The controversy surrounding the reorganization has focused on Stringer’s attempt to make changes in Japan that would have a direct impact on Japanese employees who traditionally expect a job for life.  The Japanese have remained adamantly resistant to the proposed changes. The controversy has remained a major thorn in Stringer’s control.  Now comes news that Sony has forecast a whopping annual loss of nearly $3 billion.  According to Canada’s Gazette ”the loss would be Sony’s first annual loss  in 14 years”.  Could Stringer now find himself in the reorganization cross hairs? According to a story by Pavel Alpeyev and Junko Hayashi in Bloomberg,

Sony Corp. forecast a record 260 billion yen ($2.9 billion) full-year operating loss, almost four times analysts’ estimates, as the global recession cuts sales of televisions and cameras. 

… The outlook increases pressure on Chief Executive Officer Howard Stringer, 66, who is reorganizing the main electronics business after failing to meet his pledge to raise Sony’s operating profit margin to 5 percent. Recessions in Europe, Japan and the U.S. have cut consumer spending, while Sony lacks hit products that have powered profits at Apple Inc. and Nintendo Co.

While I expect Stringer to survive for now the dismal news, he needs to find a way for the company to come up with some product hits and to demonstrate to both employees and investors that he understands what’s needed for Sony to succeed going forward.  Keep a very close eye on what transpires at Sony for the next couple of months.  

For more:   

AP  

Barron’s Blog   

Bloggingstocks   

Sonyinsider   

Silicon Alley Insider  

Forbes    

It's Official, Richard Parsons to Be Citigroup Chairman

The rumors are over, Richard Parsons, the former chairman of Time Warner, will be Citigroup’s Chairman effective February 24.  According to The New York Times Bischoff said,

he would not stand for re-election and would retire later this year.    

The Times went on to say,

Regulators have pressed the struggling financial giant to shake up its board and replace Mr. Bischoff in an effort to regain investors’ trust. Staggered by losses, Citigroup has sought two financial lifelines from Washington. 

The issue gained new urgency last week, when Citigroup announced a drastic plan to split itself in two, effectively undoing the landmark merger that formed the company a decade ago. 

Be sure there is more management turmoil to come and the possibility of nationalization remains an option open to the new government. Let’s wait and see if real change can come under Parsons.

For more:

Crains   

Times online  

Telegraph UK  

Financial Times  

Hollywood Reporter     

Recommended Reading - Director Capture, Carl Icahn's blog

Carl Icahn’s blog on January 20th included a piece on the examination of Director Capture.  According to Jonathan Macey, Deputy Dean and Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale Law School, Director Capture,

… occurs when decision-makers such as corporate directors favor certain vested interests such as incumbent management, despite the fact that they purport to be acting in the best interests of some other group, i.e. the shareholders. The problem of capture and the theories associated with the idea of capture are most closely associated with George Stigler, and the free-market Chicago School of Economic thought. Among the more interesting and important theories of Stigler and other proponents of capture theory is the idea that capture is not only possible, in many contexts it is inevitable. 

Icahn remains an obvious proponent for directors to represent shareholders rather than top management.  In light of the new administration and the likelihood of major regulatory changes to come both investors and companies might want to read the full Icahn blog piece and get to know what Academia is saying about the issue.

Best Buy's Rival Leaves the Scene While Company Changes CEO

Best Buy BBY (NYSE), the U.S.’ largest electronics retailer, announced today that the company’s long serving CEO, Bradbury Anderson, would be retiring his position in June.  The company also announced that Anderson would be seceded by president and chief operating officer Brian J. Dunn.  The succession announcement comes a week after the firm’s key rival, Circuit City announced it would liquidate its merchandise and close its stores and after Best Buy announced earlier in the month it would reduce its fiscal year 2009 earnings forecast.  In today’s announcement the company insisted Anderson’s retirement was not due to the difficulties the company has been facing due to the recession. According to a story by Sam Black for the Minneapolis/St. Paul Business Journal,

“I’ve always wanted to leave the organization at the right interlude: when I saw a new leader ready to take the organization to a new level, higher than I could take it myself,” Anderson said in a statement. “For many months, I’ve felt that Brian was fully prepared to be CEO. Based on his readiness and the journey we’re about to begin, I’ve concluded that this is the right time for my story as CEO naturally to end, and Brian’s story to begin.  

“Furthermore, this timing for my retirement is consistent with my personal goals and in accordance with our succession plan. The best part is anticipating the great joy ahead of seeing where his story arc goes, and 

how that transforms the company.” 

Anderson will complete his term as vice chairman even after he resigns his CEO position on June 24.  It is hard to accept Anderson or the company’s explanation for the announced change.  The difficulties Best Buy has faced this recent holiday shopping season and the fact that the company has so far been unable to take real advantage of its rival’s bankruptcy seem to be true reason behind the change in leadership.  Both Anderson and Dunn have labored at Best Buy from the beginning.  Each of them have worked their way up the corporate ladder.  Dunn knows the business and appears to be right for his new position.  According to a story by Mark Clothier for Bloomberg,

Dunn, who started with Best Buy in 1985 as a VCR salesman in the Minnetonka store, one of the retailer’s then 12, becomes CEO June 24. The 48-year-old has been president and COO since 2006.  

Best Buy remains an electronic retail behemoth that overall has been very well run.  The company is facing a new world as regards electronic retailing.  Dunn needs to find new ways to deal with a growing reticence on the part of  consumers to spend as they did in the past on electronics and more importantly the fact that consumers overall have reduced discretionary spending.  Keep a close eye on the Best Buy as its rival disappears from the scene and suppliers look to firm to help them succeed as well.    

For more:  

Reuters  

Associated Press  

Minnpost.com 

Thestreet.com  

Financial Times 

Twice  

CNBC (Reuters)

Businessweek  

It's Official, Sir Philip Hampton To Be RBS Chairman

Earlier today the BBC reported that Sir Philip Hampton has agreed to take the chairmanship of the Royal Bank of Scotland (RBS).  Sir Philip, who is currently the chairman of Sainsbury, will replace the current chairman Sir Tom Mckillop, who has announced his resignation.  Sir Tom’s resignation comes after the bank has undergone a series of financial difficulties and top management related changes.  As a result of the financial crisis RBS has already been partially nationalized by the UK government. Earlier this week we ran a blog discussing the possibility that Sir Philip might take the RBS Chairmanship.   

For more: 

Reuters  

Bloomberg

Edinburgh Evening News

Times Online

Bloomberg's Reilly Calls for Ken Lewis' Head

David Reilly a news columnist for Bloomberg earlier today suggested that Bank of America’s chairman and CEO Kenneth Lewis should be forced out or at a minimum should give up one of his positions.  According to Reilly,

Kenneth Lewis gambled big. He lost. Now taxpayers have to pick up his tab.    

For that, the Bank of America Corp. chief executive officer probably needs to go. At the very least, Lewis, who also is chairman, should give up one of his posts to bring greater accountability to the bank. 

Reilly is not particularly focused on BofA’s acquisition of Merrill and the subsequent difficulties that have resulted as the main reason for his call but rather Lewis’ series of ill-fated acquisitions (Countrywide etc.) and business steps that have all come together to force the bank to go to the government for money to complete the Merrill transaction.  Reilly went on to say,

Now the Charlotte, North Carolina-based company is staring into the abyss. The bank’s stock fell about 18 percent yesterday following reports that it told the government in December that it wouldn’t be able to close the Merrill deal without assistance because of bigger-than-expected losses at the brokerage.    

The government may now have to inject more capital into the company or backstop losses on a portion of its assets, or some combination of the two. The government has given Citigroup Inc. a similar guarantee against losses on some assets, although that hasn’t kept investors from fleeing its stock. 

I suspect Lewis will remain CEO and may be forced to give up the chairmanship but we will just have to see how this all plays out.  

For more:

UK Telegraph

Portfolio.com  

New York Times

Clusterstock

Dealscape 

RBS Appears Ready to Appoint Sir Philip Hampton As Chairman

Deal Journal today cites a story in the UK’s Independent Sir Philip Hampton the current chair of the J Sainsbury Supermarket chain is likely to be selected as the Royal bank of Scotland’s (RBS) new chairman.  RBS remains one of the UK’s biggest Banks suffering under the credit crisis.  RBS’s recent CEO change was examined in a previous blog.  RBS is now basically controlled by the UK government.  According to the Independent,

If Sir Philip does accept the role, he will be taking on one of the toughest jobs in the international banking sector, as the Government-controlled RBS tries to navigate its way through a vast pile of toxic loans. 

RBS has been among the biggest British banking casualties of the global financial crisis. It raised £12bn from its shareholders in the first half of last year, before accepting a further £20bn of taxpayers’ money last autumn in an attempt to stave off collapse. There are concerns in the City that a significant further deterioration in the quality of its assets could lead to the bank being wholly nationalised.   

Management change seems to be following a similar pattern in the banking industry as circumstances continue to deteriorate more and more board are reluctantly looking for changes at the top.   There remains a need for more and more changes in the boards as well.  Keep a close eye on what actually transpires at RBS over the next week or two. 

For more:  

Reuters  

Financial Times

Apple's Steve Jobs Takes Medical Leave

Late this afternoon Apple announced that Steve Jobs, Apple’s CEO, has decided to take a medical leave until June to deal with his health related issues. In his place Tim Cook, Apple’s chief operating officer, will serve as the interim CEO.  Cook handled this position when Jobs underwent surgery years back for pancreatic cancer.  CNET reported that Apple released an email that Jobs wrote to Apple’s employees. The email stated:

Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.

While the sudden announcement resulted in a late suspension in the trading of Apple’s stock after it fell nearly 10%, once this all settles down the market will hopefully recognize that the company is in good hands.  Cook was one of Job’s possible successors mentioned in an earlier blog and a story in Forbes back in the summer.

For more:

San Jose Mercury News

Electric Pig

Charlie Rose Interview of Michael Arrington, Techcrunch (video)

New York Times 

Seeking Alpha (1/15)

A Good CEO is Not Always All that is Needed - Nortel

The news that Nortel Networks NT (TSX) has moved into bankruptcy is not all that surprising.  The telecommunications firm has been suffering ever since the 2001 recession.  The company which changed CEOs back in November 2005 had high hopes with the arrival of Mike Zafirovsky.  Zafirovsky had a terrific pedigree.  He was extremely well regarded when he headed the cellphone division for Motorola.  Prior to his selection at Nortel he had been passed over for the CEO job at Motorola and appeared anxious to make his mark.  He also had tremendous training while at General Electric (before his time at Motorola) which at the time was headed by Jack Welch.  When he took the job at Nortel the company was mirred in scandal and was already suffering financially.  Zafirovsky an excellent operations manager may have lacked the strategic acumen to ultimately turn Nortel around but it is hard to see what he or anyone else might have been able to do.  According to an acute analysis by Gordon Pitts of the Globe and Mail,

… Nortel’s fate was probably determined by the time the new CEO arrived in October, 2005. The global asset meltdown and recession simply hastened the inevitable end of the Nortel saga –- as it will with many crippled companies that have entered the downturn with severe competitive liabilities. 

Mr. Zafirovski was realistic in understanding it would be a tough haul. “These things do not happen overnight” he said in an interview in summer of 2007. “We are not looking for a 50-year turnaround but we did say on Day One it would be three to five years to recreate something special. We are now 19-20 months into it so obviously the time frame is narrowing.”   

 Pitts went on to state,

Mike Zafirovski was the right leader to turn around Nortel, but he came too late to the game. He expected he might have up to five years to fix Nortel, but it was less than three years until the market collapse, which has simply thrown more gasoline on Nortel’s bonfire of cash flow. 

CEOs are essential to a company’s overall success but they are just a component.  Nortel’s management and products came up against a wall back in 2001 and never really found the right exit door to help it get back on track.  Let’s hope other struggling companies can look at Nortel and come away with some ideas on how they might manage to avoid Nortel’s fate. It is likely that Alcatel-Lucent’s situation may actually improve as a result of Nortel’s new status. Stay tuned  

For more:

Bloomberg

CEO Watch - Vikram Pandit, Citigroup

The continuing financial saga at Citigroup continues to remain front page news.  The latest moves at the bank ( Smith Barney - Morgan Stanley JV, moves to further break up the bank) all seem to be counter to the strategy Pandit has been professing for some time.  As these changes move closer to reality and Pandit continues to lose supportive allies, e.g., former U.S. Treasury Secretary Robert Rubin (resigning as Citi board member), the pressure on Pandit will only get greater.    

Let it be said, Pandit inherited a nearly impossible situation when he came in as the new CEO but its getting far more difficult to see how he can remain in his position.  More and more the U.S. government seems to be a powerful force behind the bank’s latest moves.  We will just have keep watching as changes dribble out and pressure builds on Pandit.   Pandit’s greatest hope and possible salvation as CEO is to become a “true believer” in the current changes and push hard for more dramatic and quick changes.  He must acknowledge that the global financial supermarket that was Citi must now come to an end.  Sandy Weil’s vision for Citi can no longer be valid.  

To get a sense of what he might do, check out the Breakingviews.com section in today’s International Herald Tribune.  I hope he can find the way to make things happen for the bank.  

For more:  

Fierce Finance  

Reuters  

NY Times Dealbook 

Crains

Huffington Post 

WSJ - Yahoo to Name Bartz as CEO

All the speculation about who Yahoo will appoint as the next CEO appears over.  Jessica E. Vascellaro and Joann S. Lublin report in today’s Wall Street Journal that Carol Bartz the former CEO of software maker Autodesk will be Yahoo’s next CEO.  According to the article,

Yahoo Inc. is expected to announce that Carol Bartz, former chief executive of software company Autodesk Inc., has accepted an offer to become the Internet company’s next CEO, according to people familiar with the situation. 

The real question remains where she will try and take the firm - acquisition, re-build, new direction?  We will just have to wait and see.

For more:

Reuters

The Register

Techflash  

Techcrunch

Los Angeles Times

Silicon Alley Insider  

Venture Beat

Reuters (update 1/14)

IT World (update 1/14)

Citi's Executive Management Shaky?

The weekend and early today saw a spate of articles speculating that Citigroup is under pressure from regulators to replace its chairman, Winfred Bischoff.  Speculation has arisen that Richard Parsons former CEO and chairman of Time Warner and a current Citigroup board member might replace Bischoff should he leave.  According to a story by Eric Dash in today’s International Herald Tribune,

U.S. government banking regulators are pressing Citigroup to shake up its board and replace its chairman, Winfried Bischoff, in an effort to restore confidence in the beleaguered financial giant. 

Richard Parsons, chairman of Time Warner and a Citigroup director, has emerged as the leading candidate to succeed Bischoff as Citigroup’s chairman, people briefed on the situation said Sunday night. While the timing was uncertain, the change could come as early as this week. 

A shift in the Chairman would only mean greater pressure on Citi’s current and struggling CEO, Vikram Pandit.  With the possible spinoff of Citi’s Smith Barney division into a joint venture with Morgan Stanley, which came to the fore this past week, and the continuing pressure on Citi for a breakup of other divisions — can Pandit survive? 

Questions will continue to be asked as to whether Pandit is the right person to handle these types of changes and if not, who might the bank turn to handle the job?   This all comes after former U.S. Treasury Secretary Robert Rubin resigned his board seat at the bank.  Rubin has always been considered an ally of Pandit’s.  In the midst of the continuing crisis at Citi according to Time Magazine which relies on a Wall Street Journal piece,

Citi’s board has given Pandit a vote of confidence. 

Is it deja vu or does the board really support Pandit or is it just continuing to fail in its responsibilities?  I anticipate more key management changes at the bank over the next few weeks.  Stay tuned.  

For more:   

UPI  

 Fox Business News  

Ft.com Gapplerblog  

Portfolio.com

Fool.com  

Financial Times (update 1/15)

Recommended Reading - Second Act CEOs, Comeback Kings?, The Economist

The January 8th edition of the The Economist has an article on the fate of returning CEOs.  Typically returning CEOs have not fared out that well on their second time around.  Steve Jobs serves as a major exception but Michael Dell, Dell Computer, Howard Schultze, Starbucks, and many others have not fared quite as well.  The article refers to recent research.

That there are so many disappointing second acts is perhaps not surprising, given the difficult circumstances in which they tend to begin. According to Rudi Fahlenbach of Ohio State University, former chief executives typically “come back when the firm is doing awfully”. In a recent study of 60 returning chief executives, he and two other economists found that they typically replaced bosses under whom the firm’s share price had dramatically underperformed its industry benchmark—by 20% a year on average.

The returning chief executives in the study had been particularly strong first time around, and most had not been retired for long, so they could plausibly claim to have remained familiar with the inner workings of the firm, making them better placed to revive it than any outside candidate. Indeed, most of them (including all but two of those studied by Mr Fahlenbach et al) were members of the board that reappointed them, and in many cases the chairman. Strikingly, Apple’s Mr Jobs was an exception, having distanced himself from Apple after being ousted in a boardroom battle in 1985—a separation that may have contributed to his second-act success.  

Determine for yourself whether second time around returning CEOs are worth doing.  Read the piece. 

Retailers Begin Pressuring CEOs - Chico's FAS

Dismal earnings in the retail sector are beginning to have an impact on executive management.  Today Chico’s FAS CHS (NYSE) announced the retirement of its chairman and CEO Scott Edmonds.  The company also announced that board member David Dyer, who formerly served as the CEO of Tommy Hilfiger and Land’s End, would be the company’s new CEO.  Edmonds announced retirement came after the company said its December same-store sales fell 12.4 percent.  Chico’s has been suffering for sometime now.   Back in June of this year Spotlight Capital Management an institutional investor in Chico’s had urged for the Edmonds ouster.  According to a story by Laura Layden in the Naples News Spotlight Capital stated,

“Basically, our view is that the performance over the past three years has been very disappointing. We lay blame for that at the feet of the chief executive. We do not believe he has the skills necessary to turn the business around and we are disappointed that the board hasn’t replaced him already,” said Greg Taxin, the fund’s managing director and a Chico’s investor himself.  

… “During his tenure, shareholders have lost $1.6 billion dollars. He’s got one of the worst track records of any CEO of a public company in the United States,” Taxin said.

… Under Edmonds’ watch, the public company’s stock has fallen more than 80 percent from its high and earnings per share have declined for the past three years, he said.

It’s time for the board to bring in a new leader who can turn the business around, Taxin said. 

The continuing slide in the company’s sales and its stock appears to have forced the board’s hand.  Edmonds replacement Dyer certainly has the requisite background and experience.  In both of his previous CEO stints at Lands End and Tommy Hilfiger he played a big role in the sale of those firm’s to larger companies.  It is possible may ultimately have to do the same for Chico’ s.  Keep a close eye on the moves Dyer takes over the next few months to help stabilize the speciality retailer.   

For more:  

NBC News  

Market Report - In play CHS  

New Press   

Reuters 

Footnoted.org (update 1/9)

Forbes (updated 2/6)

Quarterly/Annual CEO, CFO and C-level Change Comparisons, 2005 - 2008

Liberum has just completed a comparison analysis of quarterly and annual management changes for CEOs, CFOs and all C-level management changes (from board of directors titles down to vice presidents). The most surprising information culled from the analysis relates to declining levels of management change that took place during 2008, particularly in the last three quarters when compared with the same quarters in 2007 and 2006. While the U.S. and Canadian economies have entered a recession in 2008 most companies have been reducing overall employment and expenses. The employment reductions have not in general applied to top level management. While 2008 saw a large number of high profile CEOs and CFOs leave their positions, particularly in the financial sectors, overall this trend did not apply to the majority of corporations. As we move through 2009 we anticipate an increase in top level executive changes.

Below are three graphs that comprise quarterly and annual changes for CEOs, CFOs and all C-level executives. The information has been derived from Liberum’s Management Change Database. For more detail on the totals, please contact Liberum’s director of research.