Wall Street Journal
John "Jack" Krol, who was named last week as outside chairman of auto-parts maker Delphi Automotive LLP, exemplifies a growing boardroom trend: former chief executives taking an active role steering troubled companies.Mr. Krol, 73 years old, is a retired chief executive of DuPont Co. He says he will quickly dive into operating plans and strategy at Delphi, which emerged from bankruptcy-court protection last month.
Other recently installed hands-on chairmen, all former CEOs of other companies, include Edward Whitacre Jr. at General Motors Co., Richard D. Parsons at Citigroup Inc., C. Robert Kidder at Chrysler Group LLC, Harvey Golub at American International Group Inc. and Philip Laskawy at Fannie Mae. Each of those companies has received a federal bailout, and government officials participated in the process of selecting new chairmen.
"These chairmen are strategic equal partners of the CEO because they already demonstrated a successful 'in the trenches' style of management," says Dennis Carey, a senior client partner at recruiters Korn/Ferry International. He helped recruit Mr. Krol as part of a board shake-up after several Delphi lenders and GM, its prior parent, acquired most of Delphi's assets.
Gauging Potential Risks
Mr. Krol says he has worked on Delphi matters daily for the past two weeks, and plans to advise Delphi CEO Rodney O'Neal on his 2010 and 2011 operational plans before Mr. O'Neal formally proposes them to the board next month. The new chairman will lead a board review of corporate strategy, including potential acquisitions and spinoffs. Mr. Krol also hopes to soon meet with each division head to gauge potential risks to the business.
Mr. O'Neal views the new chairman "as a partner and coach," a Delphi spokesman says.
The trend of strong outside chairmen is most pronounced at troubled companies. But more big businesses are installing independent chairmen who previously were CEOs elsewhere. The Corporate Library, a governance research firm, says 46 former CEOs are now chairmen of other companies, up from 14 in 2004.
At GM, Mr. Whitacre, a former CEO of AT&T Corp., has appeared in television commercials for the struggling auto maker, and played a key role in persuading fellow directors to keep, rather than sell, GM's Opel brand and European operations. He has met with employees at all levels, stressing the need to improve GM's results.
Across town at Chrysler, Mr. Kidder is learning to walk a fine line to avoid meddling with management. The former CEO of Duracell International Inc. and Borden Chemical Inc. has led the board since June, when the auto maker emerged from bankruptcy-court protection and sealed an alliance with Italy's Fiat SpA.
Mr. Kidder spends an average of three days a week at Chrysler, discussing strategy with executives, including CEO Sergio Marchionne. But he is careful not to give marching orders to the CEO's deputies. "That would be micromanaging," Mr. Kidder says. "I don't want that person to think they have two bosses."
Mr. Krol says he has worked on Delphi matters daily for the past two weeks, and plans to advise Delphi CEO Rodney O'Neal on his 2010 and 2011 operational plans before Mr. O'Neal formally proposes them to the board next month. The new chairman will lead a board review of corporate strategy, including potential acquisitions and spinoffs. Mr. Krol also hopes to soon meet with each division head to gauge potential risks to the business.
Mr. O'Neal views the new chairman "as a partner and coach," a Delphi spokesman says.
The trend of strong outside chairmen is most pronounced at troubled companies. But more big businesses are installing independent chairmen who previously were CEOs elsewhere. The Corporate Library, a governance research firm, says 46 former CEOs are now chairmen of other companies, up from 14 in 2004.
At GM, Mr. Whitacre, a former CEO of AT&T Corp., has appeared in television commercials for the struggling auto maker, and played a key role in persuading fellow directors to keep, rather than sell, GM's Opel brand and European operations. He has met with employees at all levels, stressing the need to improve GM's results.
Across town at Chrysler, Mr. Kidder is learning to walk a fine line to avoid meddling with management. The former CEO of Duracell International Inc. and Borden Chemical Inc. has led the board since June, when the auto maker emerged from bankruptcy-court protection and sealed an alliance with Italy's Fiat SpA.
Mr. Kidder spends an average of three days a week at Chrysler, discussing strategy with executives, including CEO Sergio Marchionne. But he is careful not to give marching orders to the CEO's deputies. "That would be micromanaging," Mr. Kidder says. "I don't want that person to think they have two bosses."
Mr. Golub, the AIG chairman, is working six days a week on issues such as executive pay, strategy shifts and Washington relations to help ease the workload of new CEO Robert Benmosche. "To the extent I can help take some of those tasks off Bob's plate, we will get a better result overall," Mr. Golub says.
The former CEO of American Express Co. was named chairman of the New York insurer in August, just after relinquishing that post at Campbell Soup Co. and just before doing so at Reader's Digest Association Inc. He recently moved into a headquarters office near Mr. Benmosche's—at the CEO's request, says a person familiar with the situation.
But Mr. Benmosche may ultimately tire of the arrangement. At some point, he will say, "Harvey, I need to be on my way to run this shop," another informed individual predicts. The CEO declined to comment.
The former CEO of American Express Co. was named chairman of the New York insurer in August, just after relinquishing that post at Campbell Soup Co. and just before doing so at Reader's Digest Association Inc. He recently moved into a headquarters office near Mr. Benmosche's—at the CEO's request, says a person familiar with the situation.
But Mr. Benmosche may ultimately tire of the arrangement. At some point, he will say, "Harvey, I need to be on my way to run this shop," another informed individual predicts. The CEO declined to comment.
Conflicts Are Possible
Leadership experts say involved chairmen can assist troubled companies through tough times, but may also lock horns with CEOs.
In 2006, Stephen R. Hardis, a former head of Eaton Corp., was named chairman of Marsh & McLennan Cos. Late the next year, he was influential in the board's decision to seek a successor for CEO Michael Cherkasky, recalls a person familiar with the matter. At that time, Mr. Hardis said the board acted because of poor financial performance and powerpoint presentation management. He declined to comment further.
At gadget retailer Sharper Image Corp., Chairman Jerry Levin and CEO Steven Lightman clashed during 2007. Mr. Levin, a turnaround specialist who previously led American Household Inc., became chairman and temporary CEO in September 2006. He remained chairman after Mr. Lightman joined as CEO six months later.
Mr. Levin "didn't allow me to run the company," Mr. Lightman complains. "He controlled everything except the day-to-day operations." The CEO lasted 11 months.
Mr. Levin says he didn't fully grasp the retailer's worsening problems as Mr. Lightman struggled to raise capital. "I didn't get adequate information," Mr. Levin says. "I am taking some blame."
Sharper Image filed for bankruptcy in February 2008, days after Mr. Lightman quit. The concern closed its stores, then sold the remaining assets through an auction.
Leadership experts say involved chairmen can assist troubled companies through tough times, but may also lock horns with CEOs.
In 2006, Stephen R. Hardis, a former head of Eaton Corp., was named chairman of Marsh & McLennan Cos. Late the next year, he was influential in the board's decision to seek a successor for CEO Michael Cherkasky, recalls a person familiar with the matter. At that time, Mr. Hardis said the board acted because of poor financial performance and powerpoint presentation management. He declined to comment further.
At gadget retailer Sharper Image Corp., Chairman Jerry Levin and CEO Steven Lightman clashed during 2007. Mr. Levin, a turnaround specialist who previously led American Household Inc., became chairman and temporary CEO in September 2006. He remained chairman after Mr. Lightman joined as CEO six months later.
Mr. Levin "didn't allow me to run the company," Mr. Lightman complains. "He controlled everything except the day-to-day operations." The CEO lasted 11 months.
Mr. Levin says he didn't fully grasp the retailer's worsening problems as Mr. Lightman struggled to raise capital. "I didn't get adequate information," Mr. Levin says. "I am taking some blame."
Sharper Image filed for bankruptcy in February 2008, days after Mr. Lightman quit. The concern closed its stores, then sold the remaining assets through an auction.
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