By Vanessa Fuhrmans and Joann S. Lublin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 6, 2017).
The bosses of America's biggest and best-known companies are
learning a common lesson this year: The pay is great, but job
security has rarely been shakier.
In June alone, the chief executives of General Electric Co.,
Uber Technologies Inc., Whirlpool Corp., Buffalo Wild Wings Inc.,
Perrigo Co. and Pandora Media Inc. resigned or announced their
departures. Among those, only Whirlpool's Jeff Fettig didn't have
to confront investor pressure in the months before announcing he
will step down.
Their exits follow an especially busy season of upheaval in
corner offices. In the first five months of 2017, 13 companies with
market values of more than $40 billion installed new CEOs --
including American International Group Inc., Ford Motor Co., and
Caterpillar Inc. -- according to an analysis for The Wall Street
Journal by executive-recruitment firm Crist/Kolder Associates. That
is more than double the CEO changes at mega-corporations in the
same period last year.
This chief executive churn reflects a broader reality for the
country's business elite: An array of challenges -- from increasing
impatience on Wall Street and in boardrooms to a corporate
landscape rapidly transformed by new technologies and rival
upstarts -- have made the top job tougher and more precarious than
just a few years ago, top executives say. Even the biggest
companies are vulnerable to shareholder disapproval and competitive
forces that their size and stature once helped them fend off.
The typical CEO of a major company a decade ago resembled a ship
captain "who could rally a group of people with a lot of process
and procedures, " said Deborah Rubin, a senior partner at RHR
International, a leadership-development firm. "Today's CEO has to
be much more like a race car driver," she added. "You have to do
the sharp maneuvers."
Flush with more cash than ever, activist investors are pursuing
bigger corporate prey. This year, they have helped push out the
leaders of AIG, railroad operator CSX Corp. and aluminum-parts
manufacturer Arconic Inc. Indeed, one-third of the 42 S&P 500
and Fortune 500 companies that replaced a CEO through May this year
grappled with the demands of activist shareholders during the prior
chief's tenure, Crist/Kolder's analysis found.
Through June 23, activists had launched nine campaigns targeting
top management at U.S. companies this year -- and the fastest pace
since 2014, according to FactSet, a research firm.
Even GE CEO Jeff Immelt's disclosure that he would depart this
summer came amid brewing tensions with activist investor Nelson
Peltz over the conglomerate's languishing stock price.
Though the move was part of a long-in-the-works transition, Mr.
Peltz's Trian Fund Management LP had recently stepped up pressure
on GE to cut costs more aggressively and boost profits, setting off
speculation about when the longtime CEO might leave.
Mr. Immelt said he decided in 2013 that he would step aside
sometime this year after 16 years at the helm, and GE board
officials have said Trian played no role in the leadership change.
"My predecessor did it for 20 years -- it's not a 20-year job
today," the 61-year-old Mr. Immelt said last week at the Aspen
Ideas Festival in Colorado.
Growing shareholder clamor for quick results comes as new
technologies are upending entire industries. If you run a retailer,
for instance, "you are watching your whole market go away in just a
matter of years," said Peter D. Crist, chairman of
Crist/Kolder.
J. Crew Group Inc. and Macy's Inc., two such retailers that have
struggled to adapt to consumer shifts created by online shopping
and upstarts with more nimble supply chains, have recently
appointed new CEOs. Both of their predecessors, Mickey Drexler at
J. Crew and Terry Lundgren at Macy's, are remaining chairmen of
their companies.
Likewise, Ford's ouster of Mark Fields after less than three
years in its highest job was the starkest sign yet of how tech
players such as electric-car maker Tesla Inc. and Alphabet Inc.'s
autonomous-car unit, Waymo, threaten the traditional auto sector.
Mr. Fields had been groomed for years to take Ford's helm, but his
fellow board members swiftly replaced him after he failed to
persuade Wall Street he was reinventing the car maker quickly
enough. Ford said Mr. Fields, who retires in August, wasn't
available for comment.
"That's just not enough time to do that kind of job" required at
Ford, said Bill George, former chief executive of Medtronic PLC who
is now a professor at Harvard Business School. Some CEOs Mr. George
speaks with, he said, are asking themselves "How much time do I
have?"
Corporate boards increasingly reply: Not much.
"In boardrooms, sentimentality is officially dead," said
Constantine Alexandrakis, head of the U.S. for recruiting firm
Russell Reynolds Associates Inc.
Such pressures aren't just forcing boards to jettison CEOs.
Donald Hambrick, a professor of management at Penn State
University's Smeal College of Business, said he suspected some
corporate chiefs are voluntarily hastening their retirements.
Roland Smith, hired to run struggling Office Depot Inc. in
November 2013, retired earlier this year after saying he had always
planned to do so after three years. His tenure at the
office-supplies retailer marked the fifth CEO stint for the
62-year-old turnaround specialist -- and one of his toughest.
Mr. Smith's latest challenge? A 13,000-mile motorcycle trip with
his son from Key West, Fla., to Alaska and then Jackson Hole, Wyo.
"I am in total control of everything I do on the (motorcycle)
ride," Mr. Smith said from the road last week. "As the CEO, you
only are in control of a small proportion that happens."
Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com and Joann
S. Lublin at joann.lublin@wsj.com
Corrections & Amplifications The departing chief executive
of Whirlpool Corp. is Jeff Fettig. An earlier version of this story
misstated his first name in the article and graphic. July 5,
2017
(END) Dow Jones Newswires
July 06, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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