Management Turnover as Change Agent

Wednesday, December 30, 2009

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 Robert Kelley, CEO Bank of NY MellonCEO 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.

Monday, December 28, 2009

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

Monday, December 21, 2009

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 nLen Lamneck, Insight Enterprises New CEOew 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,Insight Enterprises, One Year Stock Performance - from

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.

Thursday, December 17, 2009

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,

Brian Moynihan, New BofA CEOMoynihan 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.

Tuesday, December 15, 2009

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.

Thursday, December 10, 2009

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. LawJim Lawrence, Unilever’s retiring CFOrence 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:


Times Online

Tuesday, December 8, 2009

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 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.

Wednesday, December 2, 2009

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:


Tuesday, December 1, 2009

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 HendeFrederick Henderson, GM CEOrson. 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.