Sony’s CEO Presses To Take Control of Management Reins

Sir Howard Stringer, Sony’s CEO (and a current CEO on Liberum’s CEO Watch list), has in dramatic fashion exerted his power.  In a management shakeup, Sir Howard ousted Ryoji Chubachi as president.  Chubachi, a well known Japanese executive who has been in charge of the company’s Playstation 3 and Bravia televisions, will be reassigned to a new position as part of Stringer’s ongoing reorganization.  According to a story by Hiroshi Suzuki and Masaki Kondo for Bloomberg,

(Stringer) took control of the main electronics business as the maker of the PlayStation 3 and Bravia televisions faces a record loss. 

… Chubachi, 61, will become vice chairman in charge of product safety, quality and environmental issues.

The reassignment of Chubachi, a 32-year veteran at Sony, may help clear the way for Stringer to reorganize the company as the global recession erodes sales.  

 Stringer has finally begun to take forceful action to get Sony back on track as an innovative firm.   He seems to understand that the firm needs to get itself out of areas in which it is no longer competitive, even when those areas at one time were considered the mainstay of the company’s business.  Making these changes have been complicated by the cultural and business conventions that Japanese business particularly in Japan follow.  Stringer has finally broken through a bit.  According to a story by Hiroko Tabuchi for the New York Times Stringer was quoted saying,

“We have two distinct challenges facing us,” Mr. Howard said at a news conference. “The first is the global slowdown, which force us to make significant adjustments. The second challenge is the evolution of our competitive environment. New competitors springing out everywhere.”  

… “Have I broken down all the silo walls? No,” Mr. Stringer said. “Are they very strong and very thick? Yes. But we’ve broken down a lot of them. Our goal is to continue to do that.”

 We will have to wait and see how the Japanese react to Stringer’s moves and what elese he has up his sleeve as he continues to try and reorganize the firm.  Stringer’s challenges remain large and complicated.  

For more:  

Business Week  

Reuters  

Silicon Alley Insider 

Globe and Mail (AP)  

Twice  

Register UK  

Gamasutra   

Variety  

Guardian UK  

FT.com  

Fad Clogs Maker - Crocs - Turns to new CEO --Too little too late?

The colorful plastic clog maker Crocs CROX (NASDAQ), whose shoes at one point were selling like hoola hoops back in the late 50’s and early 60’s, but are now selling more like a dying fad finally made a change at the top of the corporate ladder.  The company which had been under the tutelage of Ron Snyder has seen its stock and products decline even faster than the current stock market.  Yesterday the firm announced that Snyder would be retiring and the company had selected John Duerden, a former president and COO of Reebok International back in the 90s.  Duerden had also been a high level executive at Dictaphone.  He has over twenty years experience managing at a senior level.  According to a story in fibre2fashion.com,

Duerden began his career with Xerox Corp. and its UK joint venture, Rank Xerox, where he held line and staff management positions in Europe, the U.S., Latin America and the Asia-Pacific region. He later served as chairman and CEO of Dictaphone Corp., a maker of voice management hardware and software and subsequently as chief operating officer of the development division of Invensys plc, a British engineering conglomerate. He served as a non-executive director of Telewest plc, a British cable, TV, telephony and broadband company; and of Sunglass Hut International. He comes to Crocs from the Chrysallis Group, a consulting group he formed in 2006, focused on the development and renewal of brands.  

Crocs appears to have waited far too long to make a change at the top.  Snyder, who as the company’s CEO, was selected by Douglas McIntyre of Wall Street’s 24/7 back in November as the “Most Overpaid CEO of the Day“.  The company for too long has been living off of their plastic clogs fad.  Very little was done by the firm to find new products.  The company has managed to find ways to expand internationally but that has not been sufficient for its long term survival.  The newly appointed CEO Duerden at least has the requisite qualifications to attempt a real turnaround of the firm.  It is difficult to say in today’s difficult marketplace what Duerden can come up with in terms of new products we will just have to wait and see.  According to a story in the Boston Business Journal,

Crocs on Feb. 19 reported that it lost $33.2 million, or 40 cents a share, in the fourth quarter of 2008, versus a profit of $38.3 million, or 45 cents a share, in the same quarter of 2007, ahead of analysts’ expectations. 

It said its revenue declined to $126.1 million in Q4 from $224.8 million a year earlier.

The company said that while sales revenue declined sharply in the Americas and Europe through all of 2008, it rose 22.4 percent in Asia.

Crocs  said it expects a loss of 17 to 32 cents a share in the first quarter of 2009. It said it expected revenues of between $110 million and $135 million. 

There are many out there that still feel there is hope for the Crocs brand (see Schaeffer Market blog), I am not nearly as positive.  We will just have to wait and see what the new CEO can do to turn the company around.   

For more:  

Forbes  

Boulder County Business Report     

Womens Wear Daily  

Honda Succession Planning Shines - American Car Cos. Are You Watching?

Japanese automakers continue to show how management is performed.  Toyota recently announced a new CEO and now Honda 7267 (Japanese Exchange), Japan’s third largest car manufacturer, has announced a changing of its guard as well.  Honda has continued its tradition of appointing an engineer to its top job, something American car companies should be considering (particularly General Motors).  In a press release, Honda announced that Takanobu Ito, will take over as president and CEO in late June after the company’s annual shareholders’ meeting.  He will replace Takeo Fukui who has served as president and CEO since 2003.  Fukui has done a tremendous job managing the firm but his age 64 in combination with the current worldwide automobile industry crisis has forced the Japanese to act boldly with regard to its top management.   Acccording to the company’s press release,

Ito joined Honda in 1978, and began his career in its automobile research and development operations, principally as an engineer in the area of chassis design…  

From April 1998 to March 2000, Ito was stationed in the U.S. as Executive Vice President of Honda R&D Americas, Inc., where he became actively involved in the development of the Acura brand’s first sport-utility vehicle, the MDX…

In June 2000, Ito was appointed to the Board of Directors of Honda Motor, simultaneously gaining promotion to Managing Director of Honda R&D Co., Ltd. (Honda R&D). He subsequently became President and Director of Honda R&D in June 2003. Ito also took on a role in the area of manufacturing as General Manager of Honda’s Suzuka Factory in April 2005.

In April 2007, Ito became Honda Motor’s Chief Operating Officer of Automobile Operations and a Senior Managing Director from June of the same year.

From April 2009, he will again assume the top position of President and Director of Honda R&D, a position he will continue to hold concurrently after the successful appointment as President & CEO of Honda Motor expected in late June 2009.

Honda unlike most automobile companies has managed to remain in the black especially of late but it also finds itself under severe financial pressure and has been making changes to deal with the current circumstances.  As pointed out  in an article by Hans Greimel of Automotive News Honda faces difficulties,

Honda’s vehicle sales in the United States, its most important market, tumbled 27.9 percent to 71,031 units in January. And its market share slid to 9.4 percent, from 10.8 percent.  

Aside from plunging demand, Honda also is fighting a surging yen. The yen’s rise undermines Honda’s international profits and makes Honda’s exports from Japan more expensive.

The Japanese currency traded around 93 per dollar on Monday, not far from a 13-year high near 87 per dollar hit in January. Fukui has called the range unsustainable and has warned Honda may move more operations overseas to counterbalance the foreign exchange hit — including R&D centers.

 According to a story by AP reporter Yuri Kageyama in the Charlotte Observer,

Both Fukui and Ito said the change at the helm is a message of its determination to turn a new leaf and press ahead with technological innovations - its longtime strength - to lift its sagging business, and have the momentum to be prepared to take advantage of a recovery, when it comes.  

“We are facing hardships that come once in a 100 years,” Ito said.

Ito said he would continue in Fukui’s footsteps in developing ecological and affordable products such as the Insight gas-electric hybrid, which has been a hit since going on sale recently.

“Honda’s strength has been its sensitivity to changing times and ability to respond quickly to customer needs,” he told reporters at the company’s headquarters. “My job is to come up with products that can pave the way for new times.” 

 The announced changes at Honda also mean a dual role for the new CEO.  Ito will not only be the CEO of the firm he will also be the head of the firm’s R&D.  As automobile compnaies find themselves forced to reduce their R&D budgets, Honda continues to show how important R&D is to its long term success and survival.  American automobile manufacturing companies should start learning from the Japanese, even now as they are throttling toward possible bankruptcy.  Honda’s new CEO selection while a smart move is no guarantee of success.  The automobile industry in general will remain in difficult times for a long period.  Honda’s small size while beneficial when making changes rapidly remains a distinct disadvantage in this market when capital and resources are often needed to maintain survival.  Ito while engineer at heart has shown a keen understanding of business and the auto marketplace.  I expect he will carry on the tradition of his former boss, Fukui, and the company’s founder, Soichiro Honda. Keep a close eye on the business moves Honda takes over the next year.  

For more:  

Autoblog  

Management Today UK   

AFP  

Bloggingstocks   

Bloomberg  

Wall Street Journal  

BusinessWeek  

Dayton Business Journal  

International Herald Tribune  

Recommended Reading - SEC to Examine Boards' Role in Financial Crisis, Washington Post

According to a story by Zachary A. Goldfarb in today’s Washington Post Board of Directors at financial firms might wish to take heed.  Taylor reports the new head of the SEC, Mary Schapiro, plans to have the agency investigate whether the boards,

of banks and other financial firms conducted effective oversight leading up to the financial crisis… 

… As she examines what went wrong, Schapiro is also considering asking boards to disclose more about directors’ backgrounds and skills, specifically how much they know about managing risk…  

We are finally about to see real pressure on boards to perform their duties rather than rubber stamp management’s plans.  Time will tell if Schapiro and the SEC can make some real changes specifically with regard to how boards carry out their responsibilities.  I think with time the SEC will make some real changes. 

Smart Grid Related Firm, Itron Inc, Promotes New CEO

Itron, Inc. ITRI (NASDAQ), a global supplier of wireless data acquisition and communication products for electric, gas and water utilities yesterday announced reduced guidance for the first quarter and all of 2009.  The company also named a new CEO, Malcolm Unsworth the firm’s current president and chief operating officer.  Unsworth will replace LeRoy Nosbaum as CEO on March 31, 2009.  Nosbaum will remain executive chairman of the firm until the end of 2009.  The executive change at Itron comes at key time for the firm.  Itron is at the forefront of smart metering, a key issue the new Obama administration is expected to push for as it focuses on the improving the nation’s electric grid.  While Itron has an opportunity to take advantage of these potential changes, the firm along with some of its key competitors have found themselves facing a new competitor that could shake their foundation - Google.  Google recently announced it was looking to involve itself in the smart metering business.    According to a story by Katie Fehrenbacher in an earth2tech story referring to Google’s entry into the smart metering business,

… Google’s entrance into the space does raise a lot of questions for these firms. First off, will Google be a competitor or a partner?  

 … Perhaps a bigger question than whether Google is friend or foe is, who owns the relationship with the customer?  

… Beyond the issue of customer loyalty, Google’s entrance into smart meter software brings in a heavy-hitter for companies that are looking for Internet Protocol to be the basis of the next-generation smart grid. While some companies are hoping IP will be the dominant standard, many older companies have built networks and technologies on different standards, and even proprietary standards. Incumbent smart meter companies like Itron, Landis+Gyr, Elster and Aclara (part of ESCO Technologies) have already expressed concern over language in the stimulus bill that emphasizes Internet protocol for the smart grid.

Itron’s selection of Unsworth as the new CEO, an insider knowledgeable about the company, the industry and the vicissitudes of the industry was a well thought out decision.  The company’s board seems to be doing its job.  While Itron appears to be facing stiff competition from traditional competitors and now possibly Google, the company continues to have great potential.  Unsworth has shown himself to be a very capable executive who has the ability to stand up for the firm and make the right decisions in a difficult market.  Keep a close eye on the business decisions and possible changes Unsworth makes as he takes over management of the firm at the end of March.   For more:  Itron Press Release  RTT News  Briefing.com   

Recommended Reading - Advice for Outgoing CEOs, Business Week

Marshall Goldsmith, the well-known business author, has an insightful piece in Business Week entitled, Advice for Outgoing CEOs, How can you avoid being a lame duck? You can’t, so make the most of it.  The article focuses on one of the most important keys to executive transitions that have so often tripped up outgoing CEOs and their respective companies. According to Goldsmith,

Leaders who are getting ready to slow down and pass the baton often have a common fear: that they will become lame ducks if they announce their successors in advance. No one wants that to happen. 

Almost every leader goes through this inner dialogue as part of the challenge of “slowing down.” This fear, which often results in postponing the announcement about succession until the last minute, inhibits what could have been a much smoother transition.

Face it: When you are nearing the time to exit, you will become a lame duck! That is O.K. Eyes will immediately turn to your successor as his or her vision for the company will mean more than yours…

 Goldsmith’s advice is so on point.  If more top executives would just follow his simple advice more firms would find themselves able to handle CEO transitions far more effectively.  Key changes in corporate leadership would in most circumstances be far more effective and less problematic for companies and the executives taking charge.

Recommended Reading - Successful leadership - How would you know? London School of Business

Sir Andrew Likierman, Professor of Management Practice and dean of London Business School, put together a  fascinating piece of research on how business leaders can effectively measure their success.  The research entitled, Successful leadership - how would you know? appears on the London Business School’s website.   Professor Likierman writes,For those who want to check on their leadership success, for those who appoint leaders and for outsiders (including analysts and competitors) assessing the quality of leadership, checklists of traits are not enough. Nor are comparisons… … What’s needed is how to overcome the measurement problems.  So, a number of preliminary steps are necessary to make sure that measurement is robust.

Preliminary step 1: Agree what we’re measuring … note that this is the beginning, not the end of the story… 

Preliminary step 2: Focus on outcomes, not inputs … Success is about results, not characteristics.

Preliminary step 3: Make sure the data is as robust as possible… 

 Once the preliminary steps are taken the Professor recommends you,  

Step 1: Set up the framework…

Step 2: Use judgement to interpret… 

Step 3: As far as possible, reconcile the needs of different stakeholders…

He concludes,

Successful leadership is about a successful outcome against stated objectives combined with comparisons against a relevant peer group and the way in which opportunities are handled.  

Take the time to read this short article, it’s quite prescient, particularly now during such trying financial times. 

Back to Basics Mantra - Swiss RE Turns to New CEO

Swiss RE RUKN (VTX - Swiss) the large Swiss based reinsurance company that over the last number of years ventured into investment banking and fancy investment related vehicles today announced the resignation of its CEO Jacques Aigrain who become CEO back in 2006.  Aigrain, a former JP Morgan investment banker, took the firm in a similar direction followed by American International Group (AIG).  The unfortunate moves by Aigrain resulted in Swiss RE encountering serious problems and large losses.  The direction followed by Aigrain ultimately resulted last week with the company going hat in hand to Warren Buffett for an infusion of capital and increased ownership of the firm.  According to a story in the Insurance Journal by Jason Rhodes of Reuters,

Last week U.S. investor Buffett stepped in with CHF 3 billion ($2.58 billion) of new capital for the world’s second biggest reinsurer after the group reported a CHF 6 billion ($5.156 billion) writedown on toxic assets. 

 Swiss RE’s new capital injection and a recent announcement by the firm to go back to basics was still not enough for shareholders.  Aigrain had to resign.  According to a story by Liam Pleven and Neil Shah of The Wall Street Journal stated,

Jacques Aigrain, whose push for growth at Swiss Reinsurance Co. ended with big losses and a plummeting share price, said faltering investor confidence in his leadership left him little choice but to tender his resignation as chief executive. 

In an interview, Mr. Aigrain said he offered to step down because it was in the best interests of the firm, adding there was a risk shareholders would “not automatically trust” that he could “facilitate the full turnaround” of the Zurich-based reinsurer.

The company has turned to the firm’s deputy CEO Stefan Lippe.  Lippe has been in that position since 2008.  More importantly unlike Aigrain, Lippe is an insurance executive focused on reinsurance.  He will work to take the company back to its roots.  His appointment has been hailed by a number of analysts.  So far, Buffett has remained silent about the change but there should not be any problem on his part with the shift in firm direction and newly appointed CEO.  The company and its new CEO are far from out of the woods.  They have taken appropriate steps to get the business in order and move forward.  According to the Reuters story in The International Herald Tribune,

On the bright side, Swiss Re said last week that demand for reinsurance has increased, as many clients want protection to offset the erosion of their capital in the crisis and it expects the reinsurance premium cycle to harden further.  

… Lippe has serious, immediate problems to deal with; further writedowns on the company’s toxic assets cannot be ruled out and it will take time to clean up the balance sheet, analysts said. 

Anyone following the reinsurance industry should keep close tabs on what Swiss RE and its new CEO do over the next few months.  

For more:   

Swissinfo  

Business Insurance  

FT.com  

NY Times Dealbook  

Heelys Jettisons CEO After Eight Months

Heely’s HLYS (NASDAQ) the wheeled sneaker manufacturer that has been reeling since its fad faded has been forced to get rid of its CEO again.  Back in May 2008 the company was reeling and replaced its CEO Michael Staffaroni with Don Carroll.  Carroll had been with the firm for a short time as its SVP of Marketing.  At the time of the appointment, I was skeptical Carroll would succeed in turning the company around (see earlier blog).  Now Heely’s finds itself in an even more difficult place.  According to an article by Sheryl Jean of the Dallas News,

The Carrollton-based company that makes sneakers with built-in wheels for kids said Tuesday that Carroll’s resignation is effective immediately. Carroll, who became CEO on May 20, 2008, had been trying to turn the company around and broaden its product line. 

Heelys named Michael W. Hessong interim CEO until a replacement is found. He was the company’s chief financial officer for eight years until he left last May.

 Heelys has been looking to find a savior for some time.  The company rejected a buyout offer from footwear company Skeechers USA last summer.  Since then Heelys appears to have been looking to no avail for another buyout opportunity.  The company’s options are only getting smaller.  The choice of a former CFO as the company’s interim chief executive only points to the firm’s belief that some kind of buyout is their best option. Stay tuned.  

For more: 

 Yahoo Finance AP  

Dallas Business Journal   

Nepotism Can Work in Retail - Sweden's H and M Appoints New CEO

Sweden’s fashion chain Hennes & Mauritz (H and M) HMB (Sweden), the well regarded retail darling, has appointed the founder’s thirty three old grandson, Karl-Johan Persson to replace retiring CEO, Rolf Erikson on July 1.  Erikson had already announced his retirement and the company had focused on selecting his replacement.  Persson’s father and current chairman, Stefan Persson, is the company’s largest shareholder with 36% of the company’s shares.  Under Erikson’s CEO reign the clothing retail chain has flourished.  Even during last year’s difficult market, H&M has bucked retail trends.   According to Sweden’s locale,

Hennes and Mauritz has so far bucked the economic gloom and doom, reporting strong profit gains for the full-year 2008 and announcing the creation of up to 7,000 jobs in 2009.  

The group, known for its trendy yet affordable fashions, said its year to November 2008 net profit rose 12.5 percent from a year earlier to 15.29 billion kronor ($1.89 billion) with sales up 13 percent at 88.53 billion kronor.  

The appointment of Karl-Johan at thirty three is a bit surprising because of his age but he appears to have the right qualities necessary to keep the company moving forward.  His youth may actually serve him well as the head of such a fashion conscious and low cost retailer.  According to Camden for Families in Business,

Karl-Johan  has had an operational role since 2005 and is currently head of expansion, business development and brand and new business. He has been a board member of H and M’s subsidiaries in Denmark, Germany, the US and the UK since 2000 and in 2006 he was elected board member of H and M’s parent company.  

Karl Johan will also have the benefit in the early part of his reign to turn to his father and chairman Stefan Persson for advice. Stefan Persson had served as CEO from 1982 through 1998.  I expect that Karl-Johan despite his youth will manage to keep H and M as one of the top retail chains even during these terribly trying times.  Keep a close eye on H and M over the next year.  

For more:  

Bloomberg  

Retail Week 

Monster & Critics  

Recommended Reading - Uncompromising Leadership in Tough Times, Harvard Business School Working Knowledge

Harvard Business School’s Working Knowledge, A First Look at Faculty Research published a Q&A with Harvard Business School Professor Michael Beer.  Beer and his colleagues have a book coming out this summer entitled, High Commitment, High Performance: How to Build a Resilient Organization for Sustained Advantage.  

The book looks broadly at what it takes to build a high commitment, high performance (HCHP) system inside companies. It asks and answers questions such as: What outcomes must such an organization achieve in order to sustain commitment and performance? What are principled choices its leaders must make if they are serious about building such a firm? What are the means for changing an average company into a HCHP company? What are the key design features of such a firm?

 Beer was quoted in the article,

“CEOs of HCHP companies think very differently about their employees. They see them as an asset and care about them as people.” As a result they manage downturns differently from the norm, too.

Beer has examined a number of CEOs who have lead firms in a different manner than most of us are use to, particularly when you think of companies facing the current difficulties they have been forced to endure.  I highly recommend anyone interested in leadership/management read the article and consider purchasing Beer’s new book when it comes out this summer. 

Recommended Reading - Capitalism Should Return to Its Roots, The Icahn Report

Carl Icahn, management gadfly and investor, has gotten back on his high horse and made some valuable suggestions on how to control corporate managements in today’s troublesome business environment.  According to Icahn,

The real problem (not just executive pay) is that many corporate managements operate with impunity—with little oversight by, or accountability to, shareholders. Instead of operating as aggressive watchdogs over management and corporate assets, many boards act more like lapdogs.

Despite the fact that managements, albeit with some exceptions, have done an extremely poor job, they are often lavishly rewarded regardless of their performance. We must change this dismal state of affairs if we are to rebuild our economy in a sustainable way that rebuilds confidence. If we don’t, these problems will keep recurring as investors pile into the next Wall Street innovation or asset bubble, enabled by the kinds of managements that nearly sank Wall Street.

The problem, as I have long maintained, is that boards and managements have been entrenched by years of state laws and court decisions that insulate them from shareholder accountability and allow them to maintain their salary-and-perk-laden sinecures.

What we need are fewer government rules at the state level that protect managements. We need to return capitalism—our great national wealth machine—to its roots, where owners call the shots to managements, not the other way around.  

Icahn goes on to suggest ways to help correct the problem.  While most of Icahn’s suggestions are self-serving, since he is a major investor himself who often attempts to change a company’s management he is frequently invested in, he is nevertheless, on the right track. His latest blog piece makes a number of valuable suggestions that should get consideration by investors and the powers that be.  The blog piece is worth a read.  

Recommended Reading - Boards Refuse to Act Despite Poor Governance, Time.com

Douglas A. McIntyre wrote a piece for Time that attributed many of the recent problems top companies have been facing as a failure of the respective companies’ board of directors. McIntyre is very close to the truth. Boards have for too long just gone along and followed the lead of top management. It is now time for them to accept their real responsibilities to help guide management to make sensible corporate strategy and important business decisions. According to McIntyre,

… Each of these four companies ( referring to Bank of America, Citigroup, General Motors and Ford) has directors who chose not to ask hard questions and demand answers. How does a bank that was making $1 billion a year suddenly make $10 billion? How does a car company that nearly went out of business when oil prices rose sharply over three decades ago decide to reduce spending for the development of fuel-efficient vehicles?

Boards have some understandable reluctance to cross some lines if they may not have a tangible effect on company results. The Apple (AAPL) board clearly decided that Steve Jobs had some right to his privacy about his health. That may have been bad for investors. No one may ever know.

Several of America’s most famous companies have fallen on very hard times recently and investors might want to ask whey their boards appear to have done nothing demonstrable to help shareholders.

The short piece is worth a quick read.  Let’s hope boards get a chance to read the piece as well. 

Lenovo Jettison CEO After Poor Earnings

Lenovo SEHK (HK 992) the Chinese computer manufacturer is not immune from the weakening computer market.  For the first time in three years, Lenovo reported its first earnings losses.  The company also announced that its American CEO William J. Amelio resigned his position.  According to a story by Brain Kraemer of ChannelWeb,

In its third-quarter earnings call Thursday, Lenovo said its worldwide PC sales fell 5 percent year over year due to a continued decrease in the demand for high-end computing solutions. In China, specifically, which is Lenovo’s key market, PC sales dropped 7 percent. Lenovo’s consolidated sales for the third quarter fell 20 percent year over year to $3.59 billion.  

 Lenovo also reported a pretax loss of $90 million from continuing operations. The loss for shareholders in the third quarter totaled $97 million.

… Lenovo last month initiated a massive worldwide restructuring program that the company hopes will help it save approximately $300 million in the next fiscal year.

As  John Paczkowski of the WSJ’s All Things Digital blog indicated Lenovo seems to have got in line behind Apple and Dell.  The company has brought back its former CEO and Chairman.  The company announced today,

(1) Mr. William J. Amelio resigned as an executive Director, the President and the Chief Executive Officer of the Company;  (2) Mr. Yang Yuanqing became the Chief Executive Officer of the Company and ceased to be an Executive Chairman of the Board but will continue to act as an executive Director of the Company;  (3) Mr. Rory Read was appointed as the President and the Chief Operating Officer of the Company; and  (4) Mr. Liu Chuanzhi was appointed as an Non-executive Chairman of the Board. 

Lenovo will need to really focus on its operation to effectively compete in the difficult computer marketplace.  The company has a number of very fine products and if managed properly, should be able to weather the current economic storms.  Expect the new team to focus even more on the Chinese and Asian marketplace.  Stay tuned.  

For more:  

Los Angeles Times   

Austin Statesman  

Physorg.com 

 BusinessWeek   

Barron’s blog   

ZDNet Australia 

New York Times  

FT.com  

Bloomberg  

Recommended Reading - CEO Pay: What Role Will Perception Play, BusinessWeek Management IQ

Jena McGregor wrote a clever piece today on BusinessWeeks’s Management IQ blog on the potential impact President Obama and Tim Geither’s announcement today on restricting executive pay of companies taking government TARP money. According to McGregor’s piece,

The new plan, it appears, would only apply to companies that come back for further funds, and it was not clear whether it would apply to all companies or those considered “exceptional.” 

… But what does this mean for companies far from the chasms of Wall Street or the snows of Detroit? It could have a big impact–at least over the long term. Perception is playing an escalating role in executive pay.  

 Check out the blog, it’s a worthwhile quick read.

January 2009 Sees Tepid Executive Changes While Employee Layoffs Hemorrhage

Yesterday Liberum released its latest management change numbers for January 2009. As was the case for the last number of months executive turnover has remained tepid when compared with general unemployment figures facing North American economies. Companies throughout North America are shedding employees at an alarming pace while top executives overall have so far managed to remain immune from the layoffs. January’s executive turnover totals dropped precipitously when compared with the same numbers in January 2008. According to Liberum,

CEO turnover declined 35%, CFO turnover declined 49%, all C-level (from board of director all the way down to VP level) turnover declined 47% and board of director changes declined 41%.    

Liberum continues to anticipate that executive turnover will begin to increase as we move through February and into the latter part of the Winter and early Spring.  Below are two charts that breakdown January’s CEO and CFO turnover totals by company market caps at the time of each announced executive change.   

Recommended Reading - Managing Along the Cutting Edge, Newsweek

Daniel Mcginn wrote a terrific piece in Newsweek entitled, Managing Along the Cutting Edge.  Mcginn focuses on the need for different skills for CEOs and other executives to succeed during the current recessionary times.  I have already focused on other articles examining this issue (e.g., recent FT Report on Managing in a Downturn).  McGinn writes,

It’s not just a sense of humanity that determines how well managers lead during recession. In good times, the best CEOs tend to be what recruiter Steve Mader of Korn/Ferry International calls “strategic creators”—people who excel at sifting among new ideas and placing bets on the likeliest winners. Managing in a down economy, in contrast, is mostly about taking bets off the table, a process that requires fewer big thoughts and more painstaking attention to detail. Which CEOs are up to the task? Mader says bosses like John Thain, who was revealed to have spent $1.2 million remodeling his Merrill Lynch office last year, epitomize a chief who seems ill suited for hard times. Sonnenfeld points to Carly Fiorina, who took over HP during the Asian financial crisis and then “flailed around, swatting at strategically inconsistent, splashy options,” like its 2001 merger with Compaq, as a CEO not equipped to deal with a recession.  

If you are an executive manager or an investor considering a company pressured by the recession you should read the piece. 

CEO Watch - Ken Lewis, Bank of America, Update 1

Ken Lewis, Bank of America’s embattled CEO, is not out of the woods yet.  While Lewis managed the other day to get the support of the bank’s board, today’s New York Post in an article by James Doran stated,

A group of angry Bank of America shareholders plans to demand that Chairman and Chief Executive Officer Ken Lewis get the boot at the bank’s upcoming annual meeting. 

Whether the shareholder suit referred to in the NY Post story or other related outside pressures will ultimately result in Lewis’ head only time will tell.  At a minimum, expect far more turmoil as to Lewis’ tenure and management approach.  

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