10 CEOs who have to go
Posted
Dec 10 2008, 05:07 AM
by
Douglas McIntyre
Rating:
It is that time of year where companies should have been evaluating their plans for the year ahead. Each year 24/7 Wall Street comes out with a list of companies who should get rid of their CEOs or which should make some strategic changes inside the company that revolve around the CEO. Boston Scientific Corp., Citigroup, Dillard's, Eastman Kodak, General Motors, Nortel Networks , Rite Aid, SanDisk, SIRIUS XM Radio and Sun Microsystems are all on this year's list.
With so many stocks down 50% and more, the list could have had hundreds of management teams if stock prices were the sole criteria. Our measure for change is far more than just poor stock performance. But, these are the really big companies that the CEOs have wrecked.
Boston Scientific is somehow still being driven by James Tobin and we cannot figure out how nor why. Tobin led the company through a destruction of shareholder value in 2007, and this year's antics have only added to more compromising of the company's future.
Citigroup has been a disaster. We do not blame CEO Vikram Pandit for this entirely because most of the problems were there before his fund was bought by the big bank and before he took control. The problem is that the company needs a hatchet man and a swift action-taker more than it needs what investors have been seeing. There is more pain coming for the firm and its workforce, and the question is when and how it comes rather than if it comes. Pandit has been too slow. Getting rid of a highly overpaid board member Bob Rubin is not going to be enough.
Dillard's is being run like a family business and could use new blood, literally. The company is operated by William Dillard II as CEO (founder's son) and as Chairman, and its President is Alex Dillard. It now has activists asking for change even though management can hide behind a dual-class of stocks that allows the founding family to retain control. He is going to be a tough one to get rid of, but an outsider needs to be brought in whether the Dillard clan wants to keep their jobs or not.
Eastman Kodak needs to bring in a new CEO to more rapidly adapt to the new world of film, photography and imaging. Chairman & CEO Antonio Perez has been on our earlier list of CEOs to go, yet somehow he is still sitting on the Eastman Kodak throne despite his incredibly poor performance.
GM may seem like too easy of a pick among companies which need to replace their CEOs. Rick Wagoner needs to leave whether the company gets a bailout or not. The first beggar presentation given to Congress was almost as big of a disaster as the sheer loss of wealth which has been seen at GM. Whether Congress saves the company and other auto players is probably not going to be enough to keep Wagoner on. He might even say, "Weeee-Goner!" as he leaves.
Nortel Networks is driving off the edge into the abyss. Mike Zafirovski was brought on to fix things. Considering he came from Motorola with its lovely success story, it is not much of a shock how poorly this turnaround has gone and how the restructuring never ends. The company needs to get Zafirovski out quickly, or Nortel stock certificates will be able to be auctioned off as stock market history memorabilia.There are recent rumors that Nortel is looking at a bankruptcy filing.
Rite Aid is in a pickle jar whether it reverse-splits its stock or not. Chairman & CEO Mary Sammons needs to go if her strategy for fixing the company by mid-2009 fails. Otherwise she should turn the CEO role over to the new president. Because she turned the company around once, she has been given the benefit of the doubt more than other managers.
SanDisk is run by co-founder Dr. Eli Harari as Chairman, CEO, and a member of the Special Option Committee. He is one of the more well-known industry executives. Our call here is more of a strategic move for Harari rather than an ouster. He should remain Chairman, but the troubling times hurting results and the trends of memory prices and end-user products is going to require a CEO with restructuring experience.
SIRIUS XM Radio stands at a critical juncture. Mel Karmazin as CEO is only part of the issue here, but we think shareholders will ultimately be better without Karmazin running the ship. The reverse split of the stock and the financing needs are only part of the problem. His merger with XM has not worked. There is a real issue that if access to capital comes available, Karmazin might actually be able to take this company private at everyone's expense.
Sun Microsystems has been a complete disaster under Jonathan Schwartz as CEO. When Scott McNealy dropped the role to be Chairman it seemed like a natural choice. This was a huge mistake and shareholders are being hurt as a result. Our opinion is apparently the same as many analysts who are close to Sun as well. Schwartz just needs to go. Period.
In many cases it will be hard to find replacements for these CEOs because so many companies are in trouble right now. But, the current management at these firms may take them under.
Top Stocks blogger Douglas A. McIntyre adapted this article by Jon Ogg from 24/7 Wall St.
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