Wolseley Switches CEO

Wolseley WOS (LSE) the distributor of building materials announced its CEO since 2006, Chip Hornsby, would resign immediately. Hornsby was made CEO in 2006. Not long after his ascendance to the top, the company found itself facing the growing housing difficulties particularly its operations in the United States. At the point at which the housing market began to decline, Hornsby initiated a number of strategies to cut overall expenses particularly in the building supply area. Even with these policies in place, the firm saw its share price and profits continue to decline.

In Hornsby's place the board has selected Ian Meakins. He was previously chief executive of currency exchange company Travelex. Prior to that he held executive positions with the pharmacist chain Alliance UniChem and drinks maker Diageo. Meakins is an accomplished executive it is difficult to determine if he is a good fit for Wolseley. One can expect some real changes in strategy after he takes over his post and gets situated. Stay tuned.

Recommended Reading - Funds take greater role as activists, Globe and Mail

Steve Ladurantaye wrote a piece for Canada’s Globe and Mail about the increasing activism associated with Mutual Funds with respect to corporate management. According to Ladurantaye’s piece,

Mutual funds are becoming increasingly aggressive in voting against company management and using annual general meetings to push socially responsible agendas.

“You are seeing a less friendly attitude toward director nominees, for one thing,” said Laura O’Neill, director of law and policy for the Shareholder Association for Research and Education. “It’s a relatively positive sign that shows some movement toward a more critical approach to management.”

Don’t expect mutual funds to pressure management across the board but we can expect to see increased pressures on management by mutual funds when they determine specific corporate policies are not in their interest.

Recommended Reading - Financials Post Sign of the Times: CEO Wanted, Wall Street Journal

Susanne Craig and Joann S. Lublin wrote a story that appeared in today’s Wall Street Journal that examined the dearth of financial CEOs available to come in and run many of our troubled financial companies. According to the story,

The strain of the credit crisis, curbs on executive compensation and the specter of government scrutiny are making it harder for financial firms to lure chief executives, according to directors, executives and search firms.

“There aren’t any highly attractive CEO prospects in the financial-services industry,” said Peter D. Crist, head of Crist|Kolder Associates, an executive-search firm in Hinsdale, Ill. “The best players won’t risk their careers going to a troubled enterprise.”

… One problem is that the financial industry’s crisis has shown that some firms simply might be too much for anyone to conquer. Eventually, boards will find new CEOs who are confident enough to give it a try no matter how big the risks. For now, the pickings are slim, said recruiters involved in continuing searches.

I am not quite as sanquine about the prospects for finding new CEOs to run the troubled financial firms as are those referred to in the story e.g., executive search firms, directors and executives. I agree that finding the right candidates will be challenging but that is always the case. There are good candidates out there and many are up to the challenge, even if compensation does not meet their initial expectations. Decide for yourself, check out the story.

Recommended reading - Who could replace BofA's Ken Lewis?, Deal.com Dealscape

Dealscape today ran a piece about an IDD story on what Bank of America might do should Ken Lewis get the ax. The crus of the matter is the bak would turn to its Board of new members for Lewis’s replacement. According to the story,

IDD Magazine is reporting that BofA has a “Plan B” if the board decides to ditch CEO Kenneth Lewis. That Plan B, unsurprisingly, is to replace Lewis with one of the bank’s new board members, all of whom have banking experience.

Even a cat only has nine lives, we will just have to wait and see.

Recommended reading - Yahoo: Carol Bartz Live From Stanford Directors’ College, Barron's Tech Trader Daily Blog

Carol Bartz, the new CEO of Yahoo who has already managed to successfully defy predictions about her appointment to run Yahoo, offers a number of very useful ideas about the role of corporate board directors. Yesterday Eric Savitz posted a terrific piece on Barron’s Tech Trader Daily blog that examined Bartz’s Sunday keynote speech at the Stanford Director’s College. Anyone interested in corporate governance or the roles of board members must read the blog piece.

Recommended Reading - Why CMO Role is Not as Important as You Think, Advertising Age

Natalie Zmuda wrote a story today in Advertising Age that examined the Chief Marketing Officer title and its relative importance in Fortune 1000 companies. Zmuda refers to a recent study conducted by Ernst & Young as evidence for the title of her story.

A study conducted by Ernst & Young and presented as part of a panel with chief financial officers at the ANA Marketing Accountability and Effectiveness Conference found that 13% to 15% of Fortune 1,000 companies employ some sort of marketing position with a chief or senior-executive-level title, such as chief marketing officer or chief revenue officer. And only 70, or 7%, of those firms list the head marketer — carrying any title, not just CMO — in financial filings. Being listed in those public filings means an individual is among the highest compensated executives at the company and sits on the operating board, which is charged with fiduciary and operating responsibility for the company.

Anyone interested in CMOs and their relative importance within large public companies should read the piece.

Recommended Reading - Top investor wants annual board re-elections, Reuters

Raji Menon wrote a story for Reuters today that examined a call by the UK’s institutional investment firm, Legal and General Investment Management (LGIM), for the annual election of corporate board members. LGIM’s call is intended to help push for greater board accountability. Hopefully the same calls will be raise here in the United States and Canada by institutional and activist investors.

Anyone interested in greater corporate accountability should read Menon’s story.

Recommended Reading - Yahoo's new CFO helped sell GE Plastics, The Deal.com

Carol Bartz, Yahoo’s new CEO, continues to mold the firm and make significant changes. Bartz’s latest appointment of Tim Morse as the firm’s new CFO, again illustrates the level of change Bartz is attempting to put in place at Yahoo. The Deal.com’s Corporate Dealmaker section had a piece on this latest appointment and what it might mean for Yahoo. Check it out.

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Recommended Reading - On Whitacre Taking on GM, Footnoted.org

Michelle Leder of Footnoted.org has done it again. Today she has an interesting take on Ed Whitacre, former AT&T CEO & chairman and soon to be chairman of the new GM. Always informative, check out Michelle’s latest blog.

CEO Watch - Vikram Pandit, CitiGroup, Update #2

Damian Paletta and David Enrich wrote an article in the Wall Street Journal about growing pressure from the head of the FDIC, Sheila Bair, on executive management at CitiGroup. According to the reporters,

The Federal Deposit Insurance Corp. is pushing for a shake-up of Citigroup Inc.’s top management, imperiling Chief Executive Vikram Pandit, people familiar with the matter said.

The FDIC, under Chairman Sheila Bair, also recently pressed a fellow regulator to lower the government’s confidential ranking of Citi’s health — a change that would let regulators control the firm more tightly.

It is really difficult to determine how all these forces will ultimately play out and what they will mean for Pandit as well as a number of the executives under him. It is certainly possible his tenure may not extend much longer, we will just have to wait and see.

For more:

Reuters

Recommended Reading - Bank chiefs likely to stay in place, CNNMoney

David Ellis of CNNMoney wrote a story today analyzing why many experts think bank CEOs in troubled banks will remain in their jobs. While I do not fully agree, the story is a very worthwhile read.

Recommended Reading - Do CEOs Matter?, The Atlantic

Harris Collingwood has a fascinating article in the June issue of The Atlantic entitled, Do CEOs Matter?  While I am not in full agreement with Collingwood’s conclusions, I highly recommend that anyone interested in executive management and its impact read his latest piece.

Deere and Company Demonstrates Succession Planning

Deere & Company DE (NYSE) the heavy equipment manufacturer that has been impacted by the recession has announced a change at the top. Deere & Co. announced that president and chief operating officer and long time employee Samuel R. Allen would become the firm’s CEO on August 1. Allen who has been with Deere since 1975 will succeed current CEO, Robert W. Lane. Lane has been CEO since August 2000. Lane will remain chairman until some point in the future when Allen will take that position as well.

The change at the top comes as Deere has been facing serious difficulties. Deere has been cutting jobs and closing plants to deal with the recessionary forces buffeting the firm. While the change comes at a difficult time, it demonstrates a clear succession plan and an opportunity for the firm to continue working on ways to address its current difficulties and still find new opportunities internationally. Unlike many firms to day, Deere has demonstrated a clear succession approach.

Keep a close eye on the firm going forward as Allen takes over the executive reins.

For more:

Wall Street Journal

Reuters

Bloomberg