The recent departure of Research in Motion (RIMM) co-CEOs Jim Balsillie and Mike Lazaridis, replaced by Thorsten Heins, got us thinking about the many ways CEOs find their way to their exit. Some lucky few retire at their own speed, exiting the executive office with grace and good wishes. Others stagger out with knives in their backs, are turfed by angry shareholders, or given the boot by unhappy boards. In our list of recent and upcoming personnel changes at the top of eight prominent companies, you’ll find examples of every kind of regime change, from completely seamless to Friday-the-13th bloody.
Leaving: Interim CEO Timothy Morse, who stepped in from his CFO position after Carol Bartz was canned in September 2011.
Arriving: Scott Thompson, ex-president of eBay’s (EBAY) PayPal unit.
The Talk: Is Scott Thompson’s appointment as Yahoo (YHOO) CEO the turnaround moment the company has been seeking for years, or just the next step in its ongoing decline?
Yahoo is still the country’s biggest Web portal, and still the fourth largest website overall, after Google (GOOG), Facebook and Microsoft (MSFT).
But Web portals are last decade’s business model, and Yahoo these days has the unpleasant air of something AOL-ish: an unfashionable Web product for your mom.
The company, which lost its search engine prominence in the early 2000s to Google, and failed to find a way to exploit the Facebook-led social media phenomenon, has tried focusing on content, and now promises to turn its attention to mobile computing, but nothing has stopped its key numbers (both market share and display ad sales) from dropping.
Since Bartz’s messy firing, the firm has flirted with prospective buyers – attracted by the company’s still undeniable dominance in on-line content -- but the appointment of Johnson has, at least for the moment, slowed rumors that Alibaba Group (ALBIY), China’s largest e-commerce firm (in which Yahoo has a considerable ownership stake of 40%) was about to lead a purchase bid. The company seems to have currently settled on a complicated sale of its extensive Asian assets back to their majority owners in a tax-free deal valued at about $17 billion.
So, is Thompson the man to finally help Yahoo join Web 2.0? Opinion is mixed. He helped move PayPal from a fringe method of online buying into a 100-million-user, projected-$7-billion-revenue-by-2013 financial service. But he’s not from a media or advertising background, and he’s not necessarily a big-picture thinker. Bartz was, though, and that didn’t end well. “Scott is probably the most hands-on and execution-focused type CEO that Yahoo can get,” says Herman Leung, an analyst at Susquehanna Financial Group.
Bottom Line: Thompson has to find a way to make content sexy again.
Leaving: Lloyd Blankfein, hypothetically.
Arriving: Current president and COO Gary D. Cohn heads a long list of possible successors.
The Talk: Blankfein brazened out the 2008 meltdown. But speculation has been nonstop since then that he’s on his way out: He was irretrievably stained by the toxic activities the bank indulged in leading up to the crisis, critics claimed; the government had placed a bulls-eye on his back; legal troubles would be his and the firm’s downfall.
Blankfein has survived all expert predictions of his ouster so far. Still, intense discussion over his future grows ever louder. In part, it’s just a timing thing: Goldman Sachs (GS) CEOs typically last five years, and guess how long Blankfein has been at the top?
The trading bank is going through some major changes in the current climate, however, which may hasten Blankfein’s departure for more concrete reasons. Its upcoming annual profit report, analysts predict, will be the company’s lowest since it went public. Senior trading chiefs -- most recently the securities trading division’s Edward K. Eisler and David B. Heller -- are leaving. The business, on the whole, is contracting. And as regulatory changes that will lead to major restructuring across the entire sector come in, it will be time for a fresh(ish) set of eyes.
If Blankfein does decide to vacate his throne, who’s next? Most Goldman Sachs tea-readers pick current president and Blankfein right-hand-man Gary Cohn, and in a stable regime change, that’s what you can expect.
But if things get funky the list of possible successors expands until it includes the company’s entire management committee, depending on which expert you’re talking to.
Bottom Line: A few more senior resignations and disappointing quarters will probably see Blankfein out the door. Will Goldman Sachs go for a safe continuation with Cohn or someone less connected to the old ways of doing business?
Leaving: CEO Kevin Sharer
Arriving: COO Robert Bradway
The Talk: The world’s largest biotech company sees a peaceful handing over of the reigns this spring, as 63-year-old CEO Kevin Sharer, a 20-year veteran of the firm, retires and current COO Robert Bradway steps in.
Bradway has been with the company since 2006, rising swiftly up the ranks since he was hired away from the London offices of Morgan Stanley.
The California-based firm is expecting plenty of growth in 2012, with its drug products Xgeva (used to reduce bone fractures in cancer patients) and Prolia (used to treat osteoporosis in menopausal women) having already earned over $500 million in 2011, their first year on the market. This year, the company expects to see the FDA expand the use of Xgeva to include preventing or delaying the spread of prostate cancer to bones.
A Bloomberg survey of industry analysts says they expect to see Xgeva sales to reach $1.78 billion by 2014. Overall, they predict Amgen's (AMGN) revenue to rise 3% to $16 billion over 2012, comparable to 2011’s 3% increase. There are also, according to recent statements by Bradway, several mid- or late-stage studies due in over the next five years: positive results on these will only increase an already rosy future for the biotech giant.
Bottom Line: No managerial controversy here, though the company has had safety concerns over other products such as its anti-anemia drug Epogen. The biggest thing to watch out for is the FDA’s April 26 decision on Xgeva. An approval will significantly boost Amgen’s future sales revenue.
CANADIAN PACIFIC RAILWAY
Leaving: CEO Fred Green, supposedly.
Arriving: Hunter Harrison, currently retired ex-head of rival Canadian National Railway (CNI)
The Talk: Bill Ackman, head of Pershing Square Capital Management, which owns 14.2% of the Calgary-based railway (making them their largest shareholder), is heading a charge to oust CEO Green. Ackman claims that Green is currently leading “the worst performing railroad in North America,” and wants to replace him with Harrison, who is credited with turning around rival carrier CN before retiring in 2009.
The initiative has turned into a very public squabble between Ackman, an “activist hedge fund manager” whose firm spent first $1.1 billion to acquire 12.2% of Canadian Pacific (CP) last fall – and who has increased his position slightly since then – and the CP board. From the start, Ackman and Pershing announced their intent to push for major changes in business operations and management, including changes to the board of directors.
A he said/they said argument over how complicit the board has been in Ackman’s push to replace Green with Harrison, the struggle is also complicated by Harrison’s non-compete agreements with his former employer, which do not fully expire until the end of 2014.
John Cleghorn, CP board chairman, has now thrown his support fully behind Green, claiming that Ackman’s plans for the company are simplistic and betray a profound misunderstanding of CP. Meanwhile, Harrison, a 67-year-old who more than tripled net income during his seven years running CN using an approach known as precision railroading, is “ready to be in there for the long term.”
Bottom Line: The stage is set for a nasty proxy fight.
Leaving: Sam Palmisano
Arriving: Virginia Rometty
The Talk: A seamless handover to the company’s first female CEO, this particular succession is getting nothing but hosannas from industry analysts.
Palmisano, who joined IBM (IBM) as a salesman in 1973, is well-regarded for his tenure, during which he redefined and repositioned the iconic company. His biggest, most controversial and perhaps most forward-thinking move was taken in 2004, when he led IBM out of the PC market. Since then he’s spearheaded the company’s aggressive expansion into consultancy with the acquisition and merger of PriceWaterhouseCoopers into its Global Business Services division, among other initiatives.
Rometty is similarly an IBM vet, a 30-year employee who originally joined as a systems engineer. She has since become intimately involved at a high level in the repositioning of Big Blue, both heading up the integration of PriceWaterhouseCoopers while head of Global Business Services, and leading the company’s pioneering move into cloud computing.
Rometty’s goal is to find some $20 billion in new revenue by 2015, focusing on emerging markets, analytics and, yes, cloud computing.
Bottom Line: Rometty has already started to pull together a new management team, but expect little change in direction or management style.
Leaving: Andrea Jung, eventually.
Arriving: To be determined
The Talk: After a disastrous recent run that saw Avon (AVP) stock plummet 41% this year, long-time CEO Jung announced last month that she would be stepping down.
Phew, said investors, still reeling from an October 2011 earnings conference call that revealed a worse-than-expected third quarter earnings report, upcoming SEC investigations over possible bribery and selective disclosure to analysts, tossed sales figures and operational screw-ups.
Jung has also faced criticism over the company’s slowness in adopting technological advances, and over her extracurricular positions as both an Apple Inc. (AAPL) and GE (GE) director.
It wasn’t always that way for Jung, who enjoyed good fortunes and a sterling reputation after she first stepped into the CEO role in 1999, replacing mentor James Preston.
But now that things are going south, even Preston has turned on her. The former CEO is one of two Avon ex-leaders who have publicly criticized Jung for staying on as the cosmetics direct sales company’s executive chairman for two years after her resignation as CEO.
"I have long held the belief that once a CEO leaves that position, he or she should make a 'clean break' and not question or second-guess the actions of his successor," Preston, who ran Avon from 1989 to 1998, wrote in a Dec. 15, 2011 letter to the Avon board. "I have held true to that belief, even though in recent years I have become increasingly concerned—and saddened—by the declining fortunes of the company."
Also taking a shot across Jung’s bow: David Mitchell, Avon's chief executive from 1975 to 1983, who said in an interview that the split Chairman/CEO set-up was “a stupid arrangement” that will make it difficult for the company to attract a top level candidate for CEO.
“I am not going anywhere," Jung wrote in a recent internal memo. "I will remain very close to the business, defining the company's strategy and brand positioning.”
Bottom Line: Whoever steps up will have to spend the next two years struggling with Jung. Good luck.
Leaving: CEO Glen T. Senk, resigning to become the next CEO of David Yurman
Arriving: Richard A. Hayne, Urban Outfitters (URBN) Co-founder and Chairman, effective immediately
The Talk: Urban Outfitters is on the rebound from a very tough year and now must attempt to add an addendum to Heidi Klum's truism; “In fashion one day you’re in and the next day you’re out,” by coming back in again.
It’s hard to decide which 2011 gaffe was Urban Outfitter’s worst. Was it the boycott caused by a jewelry designer accusing the chain of ripping off her designs? Or was it when Urban managed to make an enemy of the Navajo Nation with their Navajo Hipster Panties? Perhaps it was Anthropologie's launch of a $2,200 rickshaw, ridiculed by E-Fashionistas as being pretentious at best and racist at worst. Not even Tim Gunn could make that work.
More worrying than the ticked-off client base is that the stock isn’t moving off the shelves as quickly as it should. Profit has dropped for four consecutive quarters, and holiday sales for comparable stores open for at least one year were flat. But no one’s blaming Senk apparently. The day he left stock plummeted as much as 19%, suggesting he’s going to be missed. What’s more, David Yurman worked pretty quickly to pick him up.
Which leaves poor (he just missed the cutoff for Forbes’ 400 Richest Americans list) Richard Hayne, company founder, to repair damage to both image and infrastructure.
The Bottom Line: Hayne has been left holding the bag, not to mention bags of bags and shoes. Some pundits are hoping that this will be like Howard Schultz returning to the chief executive position of Starbucks (SBUX), ready to spark a revival.
By Matthew Mallon
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