Northrop Grumman CEO to Retire with Succession in Place

Northrop Grumman NOC (NYSE) chairman and CEO Ronald Sugar will retire January 1, 2010. In his place the board selected president and chief operating officer Wesley G. Bush to run the defense contractor. Sugar, who has served as the company’s CEO since 2003, has been in charge of the firm as its value has continued to increase. Now that a new administration is in place and the U.S. economy has been under intense financial and economic pressures many defense industry firms have been working to move their operations more in line with the problems facing the United States economy. More consolidation and cost cuts can be expected over the next number of years in the defense industry. The selection of Wesley G. Bush allows for a smooth transition at the top of Northrop Grumman and the likelihood of a refocusing in the firm’s business strategy going forward.

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Businessweek

Washington Post

WSJ

Bloomberg
Smartbrief (9/18)

Suggested Reading - Where the Jobs Are, Forbes

David Serchuk, a reporter for Forbes, wrote a story today that examined where the jobs are and where they are not. Serchuk also referred to recent research by Liberum in which we recently predicted executive turnover would begin to rise as the economy moves through the Fall and into the Winter months.

Coldwater Creek CEO Resigns, Replaced by Chairman

Coldwater Creek, Inc. CWTR (NASDAQ) the women’s retailer announced today that CEO Daniel Griesemer resigned and would be replaced immediately by chairman and co-founder Dennis Pence. He has also resigned his board position. Coldwater has been struggling, just as all other women’s retailers, during the current recession but has managed to control its inventory and stay within predictions by Wall Street. It is unclear exactly what forced the change at the top of the firm. Griesemer had been appointed CEO back in 2007. Investors should keep a close eye on the firm to get a better picture behind the change and what might be planned for the firm going forward.

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Reuters

Corporate Press Release

Morgan's CEO Mack to be Replaced by Gorman in January

Late today it was announced that the often embattled Morgan Stanley MS (NYSE) CEO John Mack would be replaced in January by the firm’s c0-president James Gorman. Often considered Mack’s possible replacement, Gorman will soon be in the captain’s seat. Mack will continue as chairman. According to a Reuters story by Dan Wichins and Christian Plumb,

Morgan Stanley (MS.N) Chief Executive John Mack is stepping down and will be replaced by retail brokerage head James Gorman, signaling the storied bank is embracing stable businesses after losing big on risky ones.

… “Gorman has really earned his stripes,” said Anton Schutz, president of Mendon Capital Advisors in Rochester, New York, which owns Morgan Stanley shares. “He did a great job at Merrill, he’s doing a good job at Morgan Stanley, and the timing for a change seems to be good, because we’ve made it through the worst of the crisis.”

Many of the street’s analysts are convinced the change at Morgan is related to the issues of risk the bank experienced during the financial crisis and the change at the top is intended to ameliorate that risk going forward. It may be far too early to make that kind of the prediction, we will have to wait and see.

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Marketplace

Wall Street Journal

Bloomberg

New York Times

Wall Street Journal

Insight Enterprise, Inc. Pushed CEO Out

Insight Enterprises, Inc’s. NSIT (NASDAQ) board Monday September 8 ousted its CEO, Richard Fennesy. Fennesy had been in charge of the firm since 2004. Insight, a distributor of computer hardware and software in North America, carrying thousands of products from major manufacturers, selected a current board member Anthony Ibarguen to serve as the firm’s interim CEO until a successor is chosen. According to Insight, Ibarguen has more than 25 years of IT industry experience including serving as President, Chief Operating Officer and a director of Tech Data Corporation (TECD). Additionally, he served Executive Vice President of Sales and Marketing at Entex Information Services. He also served as President and Chief Executive Officer of Alliance Consulting Group, a privately held IT consulting and software solutions firm.According to a story by Patrick O’Grady for the Phoenix Business Journal,

co-founder and Chairman Tim Crown during a conference call said …“It was with this focus that the board determined that now is the right time to make a change in the CEO position,”

… Crown said there is no one thing that led the board to decide a change of direction is in order, but the company has been buffeted this year having to restate about $61.2 million in earnings related to accounting for certain aged transactions. The restatement involved transactions going back to 1996.

The abrupt change at Insight may augur some positive results for the firm once the dust settles and the firm focuses its business strategy. Keep a close eye on the interm CEO’s moves and the firm’s ultimate choice for a permanent CEO.

CEO Watch, Jeffrey Peek, CIT Update 1

In July as CIT continued to risk bankruptcy I placed Jeffrey Peek on Liberum’s CEO Watch list. Earlier today it was announced that CIT extended Peek’s contract for another year. In a Reuters story earlier today by Juan Lagorio,

CIT Group Inc said it has extended the contract of Chief Executive Jeffrey Peek for one year, even though his decisions to expand into risky businesses helped to push the lender to the brink of bankruptcy.

… “Keeping him (Peek) on board would minimize any distractions as the company tries to complete its restructuring,” said Sameer Gokhale, an analyst at KBW.

… “Getting a new CEO at this point in time wouldn’t really accomplish anything because the company is dealing with funding, liquidity and capital challenges, and that is not something a new CEO can fix easily,” Gokhale said.

The circumstances surrounding Peek’s contract extension are somewhat similar to many companies today. Boards remain reluctant, particularly during difficult times, to change the “captain of the ship” even while the ship is sinking or floundering. Stay tuned.

For more:

Bloomberg

New CEO Selected for First Solar

Robert Gillette, a former CEO of Honeywell’s Aerospace, was selected as First Solar’s FSLR (NASDAQ) new CEO. Gillette succeeds Michael Ahearn who will remain as the firm’s executive chairman. Gillette’s selection appears to be a terrific choice. Stay tuned.

For more:

Reuters

Wall Street Journal

Biz Journals

Tainted Green

More Governance Pressures - Teamsters Push of CEO/Chairman Split at FEDEX

Reuters reported today that the International Teamsters Union urged Fedex shareholders to separate the positions of chairman and CEO. While this is not first time this issue has been raised with regard to Fedex it represents a growing trend. While the Teamsters view may not prevail at the company’s upcoming annual meeting, we are likely to see more of this type of pressure imposed on public companies.

Recommended Reading - CEOs: Same Old Faces in the C-Suite, BusinessWeek

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.

CEO Watch - John Mackey, Whole Foods

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.

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The Deal.com

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