Friday, January 14, 2011
Jeffrey Kindler (Chief Executive): Pfizer
Why this quit is big: As a former McDonald’s executive, Kindler was hired in part because he was a pharma industry “outsider”, chosen to reinvigorate the company’s bureaucratic culture and help meet the need for change. Further, as a lawyer, Kindler was seen as better suited than others to navigate the industry’s growing legal issues. In his 4 ½-year reign, Kindler aggressively moved Pfizer into emerging markets where industry growth should remain strong over the next decade. In absorbing pharmaceutical and consumer products giant Wyeth, Kindler ensured that Pfizer will maintain its position as the world’s largest drug company for the foreseeable future.
Why it’s not as big as our Top 10: Under Kindler, Pfizer’s stock price declined far more than the industry average – more than one-third during his tenure. Furthermore, Pfizer’s pipeline is considered by many to have become stagnant under its non-scientist leader. Kindler ditched a number of once-promising future products. At the same time, Pfizer struggles to fend off serious challengers to cholesterol-reducing Lipitor®, the world’s best selling drug, as its patent expires in 2011. Some of Kindler’s choices began to impact his credibility with the company’s board and senior executives, such as refusing to name Ian Read (Kindler’s eventual successor) as his COO. Before he resigned, some observers questioned whether Kindler was losing control over too many challenges and making too many changes at once.
Johnson, Linda. “Pfizer CEO Jeffrey Kindler Unexpectedly Replaced.” 6 December, 2010.
Joel Gemunder (CEO): Omnicare
Why this quit is big: Joel Gemunder has been at the helm of elder-care giant Omnicare since 1981, steering it to be a $6 billion industry leader. His retirement, accompanied by the simultaneous retirement of SVP Cheryl Hodges, and coming closely on the heels of COO Patrick Keefe’s departure, sent stock prices tumbling 10% at the time. Such change in the midst of navigating the most wide-sweeping healthcare insurance reform will certainly challenge the new executive team. Gemunder commented that in retirement “he will focus on the next stage of his life, his family and charitable interests.” He will receive a severance package worth about $130 million in cash and stock.
Why it’s not as big as our Top 10: Despite that a significant figure in the healthcare industry departed along with a good portion of his executive team, given Gemunder’s age, 71, his retirement was imminent. An Omnicare spokesperson released that Gemunder’s departure was in the works for years and will be methodically carried out. Also, Omnicare recently settled a $98 million Justice Department suit alleging that the company paid kickbacks to nursing homes for buying and prescribing certain drugs. Lastly, departures announced prior to earnings calls are often an indication of poor performance, and Omnicare did see a decline in profits of $20 million compared to 2Q09.
Bernard-Kuhn, Lisa. “Omnicare CEO Joel Gemunder Resigns Ahead of Earnings News.” 2 August 2010.
Brenda Barnes (CEO): Sara Lee
Why this quit is big: After leading Sara Lee for more than 5 years, Brenda Barnes stepped down in August to focus on her health. As of Dec 31, Marcel Smits serves as interim CEO and an unprepared board searches for a successor with the right ingredients. During her tenure, Barnes streamlined the company’s focus back to foods, divesting apparel maker Hanesbrands Inc (Hanes L'eggs, Playtex, Wonderbra, et. al) parts of the Ambi Pur air freshner business, its insecticide line, and sold the company’s European personal care product line for $1.87 billion10
Why it’s not as big as our Top 10: Despite consolidation and massive influx of capital, its shareholders have not been rewarded and sales of foodstuffs are floundering. Even with a stronger culture of accountability, Barnes’s successor will have the task of reviving stagnating sales and continue Barnes’s efforts to build revenue from packaged foods. It is a segment that continues to be strained as all processed food, and the plastic packaging it’s in, comes under fire for allegedly adverse health effects.
Gellar, Martine. “Sara Lee Ceo Barnes Steps Down Permanently”. 9 August, 2010.
Mike Hurd (CEO): HP
Why this quit is big: Hurd was lauded by Wall Street and industry analysts for HP’s financial and marketing success during his 5-year tenure. Most observers thought he succeeded as a master of restructuring, helping to grow the complex $100+ billion company. Hurd made a series of major acquisitions, including a $13.2 billion reverse merger of EDS. Other acquisitions helped HP expand into businesses that generate wider profit margins. HP is now a formidable #2 in the computer service behind IBM. Within a year of becoming CEO, HP overtook industry-leader Dell in PC sales. In 2010, Hurd moved HP into a very competitive position in networking equipment (mainly against Cisco) in acquiring 3Com. Lastly, Hurd’s ascendance to become Oracle’s Co-CEO with Larry Ellison is already shaking the much heralded 25 year, 140,000 client HP-Oracle strategic partnership.
Why it’s not as big as our Top 10: HP made the right moves in escorting Hurd to the door. Despite his apparent success, Hurd was forced to resign amidst a sexual-harassment investigation with a marketing contractor. Though cleared of sexual-harassment claims, HP’s board revealed that Hurd violated HP’s Standards of Business Conduct in falsifying expense reports and other financial documents to cover up the relationship and even pay Ms. Fisher for work she never did. On the business side, Hurd’s critics claimed he began to harm HP’s innovative spirit by constantly reducing R&D investment to meet corporate bottom-line goals. [Ed Note: Mike Hurd appeared on Retensa’s Biggest Quits List 2005 when he departed NCR after 25 years]
Sherman, Eric. “Mark Hurd Starts Sweating: HP’s Reason for Dumping Him May Come Out.” 8 November, 2010.
David Carey, Jack Griffin, Ann Moore (“Publisher’s Musical Chairs”): Conde Nast, Meredith & Time
Why these quits are big: A lack of consistent leadership can be a serious problem for any corporation, especially where these three executives worked, the media conglomerates Conde Nast, Meredith and Time. Next year will be the first in 15 years that the four largest American magazine companies will all have new leaders, making it possible to judge whether the recent troubles in publishing can be addressed by changes in the executive suite. Want to play a game? Start the musical chairs: Ann Moore left Time Inc. (8 years as chief executive), replaced by Jack Griffin, who was poached from his job leading Meredith’s magazine division.3 Meredith, the publishing giant responsible for Better Homes & Gardens and Family Circle, promoted one of Mr. Griffin’s deputies, Tom Harty4. At Condé Nast, Charles H. Townsend, (CEO and President since 2004) agreed to hand over the job of President to protégé Robert Sauerberg. And David Carey, a longtime Condé Nast executive, departed to lead Hearst Magazines, replacing Cathleen P. Black5, a publishing industry fixture for three decades who is now the New York City schools chancellor.
Why they’re not as big as our Top 10: It is unclear what these companies hope to achieve by merely shifting the same leaders who steered the ship of publishing off course to begin with. Without innovation, changing captains will not have enough impact on an industry which is losing the race toward monetization in the digital age. Their most significant legacy is layoffs. In 2008, Moore eliminated around 600 jobs, or 6 percent of Time Inc.’s workforce6. Finally, the leaders that left may not have been that important anyway. Condé Nast said it had no plans to replace Mr. Carey, who occupied a senior and somewhat amorphous role. In leaving the position unfilled, Condé Nast implicates the top heavy burden that many publishers now regret.
Carr, David. “David Carey Leaving Condé Nast to Run Hearst Magazines” 28 June, 2010
Tony Hayward (CEO): British Petroleum
Why this quit is big: Perhaps no other multi-national corporation received more bad publicity in 2010 than BP. Hayward served just over three years as BP’s CEO, although he was with the company for nearly 30 years, having served as BP Group Treasurer and Chief Executive in charge of exploration and production in the five years prior to becoming CEO. Basically, Hayward found himself in the wrong place at the wrong time. Tony Hayward was the CEO on watch as the worst environmental disaster in U.S. history unfolded.
Why it’s not as big as our Top 10: Few would say BP is worse off from Hayward’s resignation. He is also still with BP, on the board for their Russian joint venture. In the catastrophe by which he will be forever associated, Hayward often made things worse. He publicly stated “I’d like my life back” and then attended a yacht race while his company failed to cap the largest oil spill in human history. There is an irony in Hayward being replaced by Robert Duffy, who spearheaded the oil spill clean-up. Insofar as the media, victims’ families, and activist groups looked for a scapegoat, Hayward was ripe for blame as BP could not fix what was virtually unfixable given the number of variables involved. Hayward had little choice but to resign. Whether anyone else could have done a better job is debatable. BP certainly could have done a better job of presenting an engaged, concerned CEO in an increasingly hostile environment.
“Tony Heyward.”
Ron Marshall (CEO): Borders
Why this quit is big: Leaving Borders among rumors of financial turmoil and a path toward insolvency, Ron Marshall departs after accepting the CEO position at Great Atlantic & Pacific Tea Co.9 Marshall is credited with reducing the company's debt, cutting its expenses and building the publishing community's confidence in the struggling retail chain. Abandoning of Borders as the book business is in turmoil, and as electronic book sellers are luring consumers away from book purchases at physical stores, does contribute to the rumors of Borders demise.
Why it’s not as big as our Top 10: Even though he only served a year in his post as CEO of Borders9, this was not the most shocking news of 2010. Marshall transitioned from, and to, a completely different industry. He was not likely to single-handedly save the already troubled vestige of publishing. It brings into focus that it was most likely the lack of succession planning which caused his hasty arrival and departure. In truth, his hiring was more regrettable than his quit.
The Associated Press. “Former Borders CEO Ron Marshall to Lead A&P”. 27 January, 2010.
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