Accounting Problems Ensnare International Rectifier Execs

International Rectifier IRF (NYSE), the maker of energy management systems, announced that its CEO and director Alex Lidlow resigned October 2nd effective immediately. Lidlow had already been on a leave of absence since late August after an accounting problem appeared to become more problematic. In a regulatory filing in May this year the company stated its financial statements dating back to September 2005 "should no longer be relied upon."

As the company initiated an internal investigation top executives began to be ensnared in the issues surrounding the problems. With Lidlow's resignation the firm has already lost three top ranking management officials. According to a piece by Alex Pham in the Los Angeles Times:

Since launching its investigation, it has delayed reporting quarterly financial statements to the Securities and Exchange Commission. ...In July, the company dismissed then-Chief Financial Officer Michael McGee without explanation. At the same time, Robert Grant, executive vice president for global sales, resigned.

At the time of Lidlow's initial leave of absence the company appointed general counsel Don Dancer as interim CEO. Dancer will continue in his role as acting CEO. As part of the company strategy to resolve the accounting problems it also announced plans to appoint a lead independent director (Jack Vance) and devise a special committee of the board to advise and support the acting chief executive officer. The company also changed reporting relationships at its Japan subsidiary, where the initial problems arose, to improve oversight, and added interim processes to help assure the unit adheres to proper revenue recognition policies.

The company has also engaged Korn Ferry to assist the firm in hiring a permanent CEO. It is difficult to ascertain at this point in time whether the firm can properly right the ship and get on with its business. So far the market has indicated a positive on the management moves but time will tell. Keep an eye on both Dancer and Vance to get a feel for how they plan to get the operation working smoothly again. Make sure to check out Michele Leder's piece on footnoted.org on International Rectifier.

For more:

Footnoted.org
Los Angeles Times
EE Times
Reuters
Electronics Weekly
Forbes

Activists Finally Prevail at PDL BioPharma

PDL BioPharma PDLI (NASDAQ) finally gave in to the pressures of activist investors, Third Point LLC, and Highland Capital Management. Mark McDade the CEO has stepped down as CEO and director effective immediately and the company has agreed to seek offers for the sale of the company in whole or in key parts. We already discussed the capitulation of the PDL's CEO back on August 20th. Now comes agreement to seek a sale whether full or partial.

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Mercury News
Blogging Buyouts
CNN Money

CEO Watch - Chuck Prince, Citigroup

Just as things were getting better for Chuck Prince the credit crisis roared its ugly head. Prince is once again under the gun and this time he may be forced to give up. As the bank warned on Monday that its third-quarter profit would slide 60 percent pressures grew again for Prince's head.

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IHT
24/7 WallStreet
Washington Post
FT
FT AlphaVille
AOL Money & Finance
Bloggingstocks

CEO - Watch -- Patricia Russo, Alcatel-Lucent

Rumors continue that Patricia Russo, CEO of telecommunications firm Alcatel-Lucent ALU (NYSE) is under pressure to present a restructuring plan or may be on her way out.

For more see:

Financial Times
Barron's Blog
TheStreet
Newsvine
Wall Street Journal
Trading Markets
Reuters

Pay For Performance Innovator Still A Believer

As CEO pay continues to be a hot topic, one of the original innovators in this concept, Michael Jensen, a professor emeritus at the Harvard Graduate School of Business remains a true believer. In an article by Louis Uchitelle in the International Herald Tribune he discusses Dr. Jensen's thoughts on the concept and how he thinks it can be fixed. Take a look if you are interested in CEO pay.

Food For Thought On Long Serving CEOs

According to a September 26 piece by Dennis Berman on The Wall Street Journal's Deal Journal,

the fifth year of a CEO’s tenure is his most tumultuous, and the one where he is most likely to do a deal, according to a fresh study of CEO behavior conducted by two Harvard Law School professors.

The professors John C. Coates IV and Reinier Kraakman crunched numbers on CEO tenure at S&P 500 companies from 1992 through 2004, representing a total of 6,449 analyzed years. They found that during the first four years of a CEO’s stay, the turnover is very low.

Once the fifth year hits, all kinds of weird things start to happen. The number of mergers at such companies surges nearly four-fold in that fifth year. Retirements accelerate as well.

For more on the study check out the professors' report. If you want to perform your own analysis you might consider checking out Liberum's Management Change Database which is far more comprehensive than the data used by the two Harvard Professors.

Children's Place CEO Forced Out

Children's Place Retail Stores PLCE (NASDAQ), the once high flying children's retail chain forced its CEO, Ezra Dabah to resign and named board member Chuck Crovitz as interim CEO. Dabah has served as the company Chairman of the Board since 1989 and Chief Executive Officer since 1991. In a press release the retailer said,

... an investigation found Dabah did not comply with its securities-trading policies. The internal probe also found irregularities in expense reimbursement practices by its chief creative officer. The company said none of the violations have a material affect on its operating results. The company went to say, "in light of Mr. Dabah's resignation and the change in executive roles, the company expects that additional time will be required before the company can complete its overdue Annual Report on Form 10-k for the fiscal year ended February 3, 2007, including its audited financial statements for such year, and its other overdue SEC periodic reports.

The company also announced it will soon engage a search firm to conduct a search for a permanent successor to Dabah. The initial market response to the announcement was very positive. The stock jumped after the announcement. The company still faces, however, a number of major hurdles particularly with regard to the management and approach of the firm. Children's Place has been steadily losing ground to competitors. Can new management make a difference or are the company's problems far more complicated than management alone?

For more:

NJ Record
CNN Money
Prime Newswire
Wall Street Journal (reg. req.)
MSN Money
BusinessWeek
RTT News

Microsoft Looks To Outside Talent to Compete

Microsoft MSFT (NASDAQ) appears to be taking a new tack in its competition with Google and other competitors. According to a piece by Robert A. Guth in the Wall Street Journal, Microsoft has finally recognized the need to hire outside the firm to compete with it rivals. In the piece Guth stated,

Before Brian McAndrews agreed to take charge of a crucial piece of Microsoft Corp.'s online advertising business, he insisted on a key condition: that he be granted certain power over the engineering part of the operation.

For a quick look on the outside talent Microsoft has hired over the last number of months, contact Liberum Research and we will provide a overview for free.

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Bloggingstocks

Has General Mills Re-written Succession Planning Rules?

In what many considered a surprise announcement, General Mills GIS (NYSE), the second largest U.S. cereal maker, announced that its chief executive officer for twelve years, Stephen Sanger is stepping down effective immediately. The company promoted president and chief operating officer Kendall J. Powell to chief executive officer. Sanger will remain as chairman through May.

Company spokeswoman Kirstie Foster said,

...it was Sanger's decision to step down as CEO. The board made the decision Monday morning, she said, just before the the company's annual meeting. The hand over was, "a planned and thoughtful part" of the company's succession plan, although General Mills had not previously announced that Sanger would be leaving his post, she said. She went on to say, "The Board values Stephen's continuing leadership as chairman, and Stephen agreed to continue in that role for a time to aid in the transition".

It is very unusual for succession planning to work in this manner, yet there were some indications earlier that Powell was a successor in waiting. Earlier in the month, CFO magazine had a piece by Laura Mars about the ambiguity surrounding the vice chairman title. In the article, Mars referred specifically to Powell as Sanger's successor.

Powell appears to be a good choice to replace Sanger. Powell is 53 years old and has worked with the company since 1979. General Mills promoted Powell to president and chief operating officer in May 2006 after he increased marketing of new cereals to win back customers from Kellogg. He holds a bachelor's degree in biology from Harvard and an MBA from Stanford. The real question that remains unanswered is is why Sanger left or was forced out. The company met its expected numbers and has been performing quite well.

Keep a close eye on the company's operations and the steps Powell follows to transition to his new leadership.

For more on the change:

Bloomberg
Newsvine AP Story
Business Journal
Ad hoc News
Market Watch

Noble Corporation CEO Unexpectedly Resigns

In an unexpected announcement oil and gas services provider Noble Corporation NE (NYSE) said that Mark A. Jackson has resigned as chairman, president and chief executive, effective immediately, and will be replaced on an interim basis by William A. Sears. Sears has been a director of the company since January 1998. He has more than 40 years of experience in the oil and gas industry and retired from his position as director of operations for British Petroleum Exploration in 1997.

Jackson joined Noble in September 2000 as Senior Vice President and CFO, and was promoted to Chief Operating Officer in March 2005. He was named President of the company in February 2006 and appointed as CEO in October last year. In April this year he was named as Chairman of the company's board. According to a piece in MarketWatch, Lawrence Chazen, a member of the board is quoted as saying,

"He's moving on for personal reasons," said Chazen, an investment advisor in Monterey, Calif. "His family's in Dallas and he'd been with us for a long time, and I just think he maybe wants to move back to Dallas." Chazen said he was "surprised" by Jackson's resignation.

It is difficult to determine the reason behind the surprise announcement. Earlier in the summer, Noble announced an internal investigation of its Nigerian operations to determine whether one of its affiliates paid bribes for permits to move rigs into Nigerian waters. The company said that its probe would focus on the legality under the U.S. Foreign Corrupt Practices Act or FCPA, as well as under local laws.

Noble is a solid company but investors should keep a close eye on coming events as the company works to find a new CEO.

For a different take see:

Streetinsider
Reuters last Wed.