Monday, August 31, 2009
Thursday, August 27, 2009
Jena McGregor wrote a piece for BusinessWeek that examined the surprising slow level of CEO turnover throughout the current recession. While overall unemployment during the same time frame has reached decade highs most top executives with obvious exceptions have managed to stay put. McGregor summed up the situation as follows:
When Abraham Lincoln and Franklin D. Roosevelt campaigned for reelection during wartime, they told voters it was a bad idea to switch leaders midstream. Today, CEOs seem to be convincing their boards of the same thing.
The reporter turned to Liberum for some of her statistics. As reported in the piece, Liberum anticipates an increase in top level turnover as we move into the Fall. Stay tuned.
Wednesday, August 26, 2009
John Mackey, the chairman and CEO of Whole Foods WFMI (NASDAQ), has found another opportunity to put his foot in his mouth. Mackey, Whole Foods’ controversial chairman and CEO, recently wrote a highly publicized op ed piece in the Wall Street Journal criticizing President Obama’s plan to reform healthcare. Many shareholders and shoppers at Whole Foods were quite distressed by Mackey’s comments in the piece. This is not the first time Mackey has found himself on the hotseat. Back in 2007 he nearly destroyed his company’s efforts to acquire Wild Oats one of his firm’s key competitors. Mackey was discovered to be writing negative comments about Wild Oats under an assumed name on Yahoo’s Finance Message board. The controversy nearly cost him his job. Then recently he was quoted during an earnings call in which he said,
“We sell a bunch of junk.”
Mackey now finds himself under pressure from activist investor CtW Investment Group. The firm recently wrote a letter calling for his dismissal as chairman and for the firm to develop a succession plan for his CEO position. I think the latest controversy will not disappear quickly and it is quite possible his time is numbered.
Monday, August 24, 2009
Joann S. Lublin wrote a story for the Wall Street Journal on the compensation package Valeant Pharmaceutical’s VRX (NYSE) CEO, J. Michael Pearson has had with his firm since 2008. Unlike so many CEOs, Pearson’s compensation was designed to be a real performance package. According to Lublin’s story,
… Directors of the midsize drug maker required him to buy at least $3 million in stock (when be began), forgo routine annual equity grants and hold many shares for years before selling.
No single element is unique, but the combination is rare — for a public company.
… Pay experts say the deal gives Mr. Pearson incentives to boost long-term value for investors. For example, the 49-year-old CEO only gets to keep certain restricted shares if Valeant’s share price increases at least 15% a year through February 2011. Mr. Pearson can’t sell most restricted shares or exercised stock options for two years after they vest.
… “Many companies would benefit from imitating this or moving in this direction,” adds Steven N. Kaplan, a University of Chicago business professor and pay researcher. “More pay for performance is a good thing.
This is the type of compensation package that needs to get a great deal more attention by shareholders, the press and even government regulators. If more and more companies look at this model and try and use it as a guide we may actually see compensation excesses fade as an issue.
Friday, August 21, 2009
Thursday, August 20, 2009
Tuesday, August 18, 2009
Recommended Reading - Intel CEO Paul Otellini credited with putting chip maker back on track, Mercury News
Paul Otellini, Intel’s CEO, received high praise for his three year push to make the firm important again. In a story by Paul Johnson for the Mercury News the reporter wrote,
Since becoming Intel’s CEO four years ago, Paul Otellini has presided over one of the most dreadful periods in the Santa Clara chip maker’s history.
… When he took control of the company, it was staggering from a string of questionable business ventures and product missteps, and its once high-flying stock began to sag. Then its sales practices came under increasing regulatory scrutiny, recently resulting in a $1.45 billion European antitrust fine. As if that weren’t enough, it got body slammed by one of the nastiest recessions ever.
… But all in all, analysts say, Otellini’s record so far has been impressive.
“About three years ago, half the Street was calling for his head” said Hans Mosesmann of Raymond James & Associates. Today, he added, “I’d give him very high grades. B-plus, A-minus. Pretty darn good considering all the stuff he inherited.”
Otellini deserves all the praise he has received and more. Despite the many difficulties he has faced since taking the reins of the company overall he has managed to perform what many might consider a minor miracle.
Monday, August 17, 2009
Jalopnik, the car blog, leaked a GM Memo today on more management and strategic changes planned for the struggling car company. For those interested in the auto industry and particularly in General Motors check out the leaked memo.
Friday, August 14, 2009
GM’s new chairman, Ed Whitacre the former AT&T chairman and CEO, appears to be taking his news responsibilities seriously. According to a story by David Welch in BusinessWeek,
General Motors’ recently installed CEO, Frederick A. “Fritz” Henderson, has had just one board meeting with his new slate of directors. And already they are giving him pressure to show better results.
… (Henderson’s) first board meeting shows a stark contrast from GM’s old board. With a few exceptions, the previous directors showed a lot of patience with ousted Chairman and CEO Rick Wagoner. He racked up some $80 billion in losses since 2005 but kept solid backing. The old board also had to focus mostly on costs since the automaker has been in nearly constant restructuring mode for years.
… At the meeting, new Chairman Ed Whitacre, who had previously been chairman and CEO of AT&T (T), and several other directors pressed Henderson on how the company would build revenue, strengthen its brands, and communicate the message that its new products are competitive. “All of their questions were on revenue,” Henderson said, adding that they asked, “What are your metrics? How will you hold yourself accountable?”
While the government has been constantly under criticism for getting involved in the auto industry’s affairs and bailing them out so far, it has demonstrated far more moxy in relation to management than previous shareholders. Let’s hope the new board can really get some results out of GM’s new CEO, Fritz Henderson and his management team. Stay tuned.
Monday, August 10, 2009
Nortel in the midst of bankruptcy saw its CEO, Mike Zafirovski and a large portion of the entire board announced their resignations today. Back in November of 2008 I thought Zafirovski was on his way out. He has survived much longer than I anticipated. According to a story in today’s Canada Globe and Mail Report on Business,
“The direction has been set and we are now at a natural transition point as we continue to service customers, maximize value through sales and continue restructuring activities,” Mr. Zafirovski said in a news release.
“We’ve reached a logical departure point,” added Harry Pearce, the chairman of the board, who is stepping down along with five other directors: John Manley, James Hunt, Richard McCormick, Claude Mongeau, and Mr. Zafirovski.
It is sad what has happened to the once thriving telecom equipment firm. Keep an eye on how this all plays out.
IG’s latest selection of Robert Benmosche, the former CEO of MetLife, is getting a fair amount of praise before he begins his new job and comes out of retirement. Benmosche gets high praise in a story by Leslie Scism, Joanne S. Lublin and Liam Plevin of the Wall Street Journal (sub req.). The reporters stated:
He will also be the most decisive, direct and tough leader to run the battered insurer since Maurice R. “Hank” Greenberg’s nearly four-decade reign ended amid an accounting scandal in 2005.
Mr. Benmosche, former colleagues say, is willing to upend cozy corporate traditions and make unpopular decisions. His strong personality could be just what AIG and its majority owner, the U.S. government, need to manage the company.
AIG’s subsequent selection of Harvey Golub, the former CEO of American Express, as the company’s new chairman appears to be another feather in the company’s cap. Whether it is the government or the company making the executive selections it appears AIG is at least making some positive moves.
Tuesday, August 4, 2009
Ken Lewis, Bank of America’s embattled CEO, continues to oversee more executive management changes. Over the last few days a number of major management changes have been announced. In response to the growing number of top management changes speculation continues to grow that a potential successor is being developed for Lewis’ job. According to a story by David Mildenberg for Bloomberg,
Bank of America Corp., under pressure to overhaul management and reduce risk, set up a five-person competition to replace Kenneth Lewis as chief executive officer.
The bank yesterday shuffled senior management… Liam McGee, who headed consumer banking, left and was replaced by Brian Moynihan in a division that has provided most of the Charlotte, North Carolina-based bank’s revenue and profit.
Moynihan, 49, who ran wealth management and corporate and investment banking, is the top CEO candidate, according to analysts including Richard Bove of Rochdale Securities. Possible successors include ex-Citigroup Inc. executive Sallie Krawcheck, hired yesterday to head wealth management, home-lending chief Barbara Desoer and Chief Financial Officer Joe Price. Also in the running is Tom Montag, a Goldman Sachs Group Inc. veteran.
The speculation on who may take Lewis’ place is just that — speculation -- but it is very likely he is getting close to the end. Keep a close eye on the top players and what next steps take place.