Recommended Reading - Even good CEOs can pick the wrong direction

Del Jones authored an article in USA Today yesterday on CEOs and how they manage. The article focuses on the obvious importance of judgment when evaluating CEOs.

Fresh research by top leadership gurus suggest that if great leaders have something in common, it could be this: a knack for escaping lapses of bad judgment. Or, at least the luck to do so. It may not even require an all-star's batting average in judgment. From Abraham Lincoln, our greatest leaders often have inconsistent judgment but, over long careers, find a way to be on the right side a few times when judgment is critical.

If you are interested in leadership and corporate management the article is worth a quick read.

CEO Watch - Ian McCarthy, Beazer Homes

Beazer Homes BZH (NYSE) CEO, Ian McCarthy has more problems than just an SEC investigation, declining profits and job cuts. CTW Investment Group, a shareholder advisory group, in a letter to the board has called for McCarthy's head.

With Beazer’s stock down nearly 80% this year and cancellations reaching a staggering 68% last quarter, decisive action by Beazer’s independent directors is required to restore investor, creditor, customer and regulatory confidence. Specifically, we call on you to immediately:

1. Replace CEO Ian J. McCarthy;
2. Name an independent board chairman; and
3. Establish a Legal and Regulatory Compliance Committee.

Rather than create sustainable, long-term value for shareholders, Mr. McCarthy has garnered egregious compensation while allowing his management team to violate federal law, improperly account for land development costs and sale-leaseback transactions, and provide undisclosed loans to executives.

Up to this point the company has not responded to the request. With the housing situation only expected to get more difficult, the company still reeling from financial related improprieties, suspension of the quarterly dividend and growing job losses, McCarthy will have a hard time saving his position.

Stay tuned as this situation heats up.

For more:

Forbes
CNN Money
CTW Investment Group Letter
Atlanta Business Chronicle
Schaefer's Research
Houston Chronicle
Financial Week

Recommended Reading - Succession Planning

Today's International Herald Tribune contains an article by Louise Story on the demise of succession planning for CEOs in the United States.

For years, the idea of grooming a successor was a job requirement of a chief executive and a priority for a company's board, who both wanted a smooth transition.

That is no longer the case. Corporate governance specialists say that succession plans at many companies are sparse, and directors are increasingly turning to outside candidates when a chief executive leaves suddenly or is dismissed.

... A result is that for a variety of reasons, several prominent corporations that typically promote chief executives from within have turned to the outside to fill their top spot in recent years, including Boeing, Chrysler, Con-Agra, Ford, Hewlett-Packard and 3M.

Take a look, it's worth a read. I don't completely agree, but it is true many more situations involve a turnover without an heir apparent waiting in the wings.


For more on the topic:

Newsday

CEO Watch - Richard Parsons, Time Warner Update 2

It's official, Time Warner TWX (NYSE) announced that its Board of Directors has elected Jeffrey L. Bewkes as Chief Executive Officer of Time Warner Inc., effective January 1, 2008. Bewkes currently President and Chief Operating Officer will retain the title of President. Bewkes will succeed Richard D. Parsons as CEO, and Mr. Parsons will remain as Chairman of the Board.

There may be real changes ahead for Time Warner. Stay tuned

For more:

Time Warner Release
LA Times
Times Online UK
Marketwatch
The Register
CNBC

CEO Watch - Richard Parsons, Time Warner Update 1

Reuters today reported that according to a report by CNBC, Richard Parsons will step down as CEO of Time Warner. The report claims Parsons will step down as CEO but remain as Chairman. Jeffrey Bewkes, the chief operating officer would become Parsons' replacement as CEO on January 1, 2008.

We can expect a lot more on this shortly.

For more:

paidcontent.org
CNBC
Wall Street Journal

Recommended Reading - Forbes, Wanted CEO of major corporation

In light of the recent two major CEO changes (Merrill and Citigroup) Geoff Colvin of Forbes wrote an interesting piece on CEO succession planning. Obviously, the article was written after both aforementioned companies failed to have a succession plan in place. Take a look.

CEO Watch - Charles Prince, Citigroup

The die has been cast, Prince has resigned as CEO and Chairman of Citigroup. In his place, Former Secretary of the Treasury, Robert Rubin and current Citi board member has been made chairman. Sir Win Bischoff, chairman of Citi Europe and a Member of the Citi management and operating committees, was made interim CEO. Bischoff will remain interim CEO until a successor is found.

On top of the management changes Citigroup said it would take an additional $8 billion to $11 billion in write-downs related to mortgage-related securities. Hopefully, no more shoes will drop. Citi insists it will not reduce its dividend as was suggested by some analysts late last week.

Monday should help sort out exactly what is next with more updates on the changes and how Citi plans to deal with the situation in the short-term.

Stay tuned.

For more:

Citigroup Press Release
Deal Book
Independent UK
Australian Business (WSJ)
Bloomberg
Crains
MarketWatch

CEO Watch - Charles Prince, Citigroup Update 4

Prince's time may finally be up.

As Citi's stock continues to slide and calls for Prince's head have grown the end seems near. Charles Prince, Citigroup Inc.'s CEO, will offer to resign Sunday, according to sources cited in a Wall Street Journal report.


For more:

Telegraph UK
Reuters
Wall Street Journal
CNN
Bloomberg
AP
AFP
Reuters

Multiple Management Defections From Toyota North America

Liberum Research often monitors multiple management changes at companies. We rely on this technique as one of many methods investors can use as a way to evaluate a firm as a potential investment opportunity (positive or negative) as it relates to management change. Today's International Herald Tribune for example, focused on recent senior executives that have left Toyota's North American division for rivals in the United States.

Toyota, as everyone is aware, has been giving American and its Japanese competitors constant pressure as the firm continues to move to new heights. The major defections could have an impact ultimately on Toyota's North American operations. In the story the writer, Yuri Kageyama states,

In just the last three months, three senior executives in Toyota's North American business abruptly left for rivals. The high-profile defections underline a new danger looming for the Japanese automaker - the lure of U.S. companies wooing the best in its ranks.

The executive exodus signals the overseas growing pains at Toyota Motor. It now sells three-quarters of its vehicles outside Japan and runs more than 50 manufacturing plants abroad, including five vehicle-assembly plants in the United States.

Always keep an eye on multiple management changes at companies, even when those changes are below the top C-level executives. Such changes may be an indicator of something going on at the firm.

CEO Watch - Charles Prince, Citigroup Update 3

Can Prince continue to hold on to his position in spite of continuing bad news impacting the firm? Rumors were flying through the markets today that Citi might need $30 billion in short term loans. The rumors hurt the market and continue to put unending pressure on Citi.

Can Prince really withstand the pressure and will the board continue to back him?

For more:

Deal Journal
Times Online UK
Seeking Alpha
FT