By Laura Stevens
United Parcel Service Inc. named David Abney to succeed Chief
Executive Scott Davis on Sept. 1, signaling the U.S. shipping
giant's growing focus on international operations.
Mr. Abney, a 40-year company veteran and the current chief
operating officer, will also be responsible for steering UPS
through the explosion of e-commerce and improving its U.S.
capabilities after it couldn't keep pace with Christmas shipments
last year.
In keeping with tradition, the 58-year-old executive is a
company insider, like every CEO before him. Mr. Abney has held
several important posts, including president of UPS International
from 2002 to 2007, when he expanded the company's global
logistics.
The timing was also largely expected because of UPS's history of
rotating out its CEO every five to seven years. But in a departure
from past company practice, Mr. Davis, 62 years old, who has led
the company since 2008, will stay on as chairman when he retires
Sept. 1.
"I think the timing is right, and the company is in great
hands," Mr. Davis said in an interview Friday with The Wall Street
Journal.
Mr. Abney, he added, "has got a great understanding of the
business. The world is changing around us very fast with
e-commerce, with the emerging markets, and David's got a very good
understanding of that."
Mr. Davis said the UPS board officially decided Thursday on Mr.
Abney, although he'd been a favorite in the succession-planning
process. He added that he doesn't expect any other members of the
executive team to depart.
Many analysts had predicted Chief Financial Officer Kurt Kuehn
would get the top job, in part because he has a more visible role
with investors. But they said Friday that Mr. Abney is a good
choice for the position, after a long apprenticeship that began as
a part-time package loader in 1974.
"He's a UPS lifer, he's run the international business, and he's
made acquisitions," said Kevin Sterling, an analyst with BB&T
Capital. "David's got international experience, and that's a real
focus area of growth for them."
UPS recently completed a $200 million expansion of its Cologne,
Germany, hub, and has moved to rapidly build its network in China,
including opening a new intra-Asia hub in 2010. The company also
made a nearly $7 billion bid to acquire Dutch parcel-delivery
company TNT Express NV, but abandoned the bid early last year after
the European Commission raised stiff objections on antitrust
grounds.
The international package operations booked a $1.76 billion
operating profit last year, about a quarter of the company's total.
Some 77,000 of the company's 395,000 employees are located outside
the U.S., with UPS operations in more than 220 countries and
territories.
Mr. Abney said in an interview that he will be focusing on three
main areas as CEO: international sales and customer
diversification, accelerating the use of technology, and providing
better customer service.
"You know the world is changing, and the emerging markets are
getting more and more important," he added.
Mr. Abney has been more active on the two most recent earnings
conference calls with analysts, explaining the company's plan to
recover from problems over the Christmas season. UPS acknowledged
on Dec. 24, 2013, that it wouldn't be able to deliver all its
packages on time because of a flood of unexpected last-minute
online orders.
Mr. Abney said he has been leading a team on planning for this
year's peak shipping season that started with a meeting on Dec.
26.
Mr. Davis is a 29-year company veteran. UPS said Friday it made
significant improvements in its logistics network under Mr. Davis's
leadership, rapidly growing international operations, and the
supply chain and freight businesses despite rocky economic
conditions.
" Scott Davis has skillfully guided UPS through one of the most
turbulent global economic periods in history," Duane Ackerman, a
member of the UPS board and chairman of the nominating and
corporate governance committee, said in a news release.
Since Mr. Davis took over as CEO at the beginning of 2008, the
company's share price has risen 50%. Revenue, meanwhile, increased
to $55.4 billion in 2013 from $49.7 billion in 2007.
Jim Corridore, an analyst with S&P Capital IQ, cautioned
that keeping the outgoing CEO as chairman carries risk. "Mr. Davis
will have to step back and let Mr. Abney lead," he said.
UPS, founded in 1907, has always chosen its CEOs from within
after founder Jim Casey stepped down following 55 years at the
helm. Nearly all of the top executives have been with the company
for more than 30 years. Many started as package sorters or drivers
before working their way up through different divisions at the
shipping giant.
In grooming leaders, the company often sends its executives
around the world and puts them into assignments which will help
them grow, said Jeffrey A. Sonnenfeld, a professor at the Yale
School of Management and a close UPS observer.
Mr. Abney is a globalist and an operations wizard who "knows how
to roll up his sleeves and resolve something on a grass-roots
level," Mr. Sonnenfeld added.
Anna Prior contributed to this article.
Write to Laura Stevens at laura.stevens@wsj.com
Access Investor Kit for Giant Interactive Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=US3745111035
Access Investor Kit for United Parcel Service, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=A591&isin=US9113121068
Subscribe to WSJ: http://online.wsj.com?mod=djnwires