Some take drastic measures. Others get back to basics. Still others find new approaches. SAP and CA addressed their woes with strong decisiveness and management changes while companies like CA, PTC, and Xerox moved to consolidate power. The overarching lesson in the first quarter: One central command may be needed in troubled waters.
Clear trends are emerging and continuing in the first quarter of 2010. At the board level, non-CEOs are being promoted to boards in recognition of their importance to the company. Technology risk and customer insight are causing boards to invite CIOs to the boardroom table. And we are seeing women nominated to boards and appointed to positions of significant P&L responsibility or revenue responsibility.
We believe the tide is turning in technology and activity is picking up. The industry is maturing and its executives have been around the block. Technology has created its own ecosystem. The time to position key executives for the next phase of growth is now.
I hope you glean some strategic insights from the Vell Executive Search first quarter newsletter. We'll be keeping our finger on the pulse of executive and board appointments and compensation trends during the second quarter. So stay tuned.
Feel free to call us or email us your comments. We would be delighted to hear from you!
All the best,
Vell Executive Search
Excutive Moves of Note
SAP's Sweeping Changes Breed Co-CEOs
SAP has seen a flurry of moving and shaking within its executive ranks since the resignation of its CEO, Leo Apotheker, 56, in early February 2010. Apotheker presided over the first earnings drop since 2003. SAP appointed two SAP veterans Co-CEOs ; product development executive Jim Hagemann Snabe, 44, and Bill McDermott, 47, a sales and field operations executive with roots at Siebel, Gartner and Xerox.
Noteworthy is the fact that SAP's board wants company co-founder and chairman of the Supervisory Board Hasso Plattner, 65, who is also the company's largest shareholder, to play a greater role in its development. He justified this by harkening back to ‘the best years' when Ray Lane and Larry Ellison ran Oracle, Bill Gates and Steve Ballmer ran Microsoft and he with Dietmar Hopp and later Henning Kagermann ran SAP as a team. The Inside-Outside Leadership model is well documented as a very effective approach by David Thomson in his best-selling book Blueprint to a Billion.
This dynamic duo leadership model is employed at many successful companies, including Apple and Research in Motion (RIM). At Apple, for example, CEO Steve Jobs is outward-facing and COO Tim Cook is inward-facing. SAP utilized a similar approach to RIM with a Co-CEO leadership model. The Co-CEO strategy may serve to reinvigorate SAP's corporate vision and drive stronger financial performance in the quarters ahead.
EMC Moves Focus on Software with Marketing, Strategy, and Strategic Alliances
EMC has made some deep strides in its leadership at the top within the past year, and the changes continued in the first quarter of 2010.
In February, EMC announced that 26-year Accenture veteran Terry Breen has joined EMC as senior vice president of Strategic Alliances, focusing on strategic go-to-market relationships with systems integrators, outsourcers and service providers. In March 2010, Jeremy Burton, 42, was named Chief Marketing Officer. Burton has deep roots in Software, including Symantec, Oracle and Veritas and CEO experience.
EMC also made the news in the first quarter on paying Pat Gelsinger, COO and Intel veteran $11.7 million for his first year. EMC pays to get "A" players and win.
Microsoft Promotes from Within
In March 2010, Microsoft announced the promotion of Robert Youngjohns, 57, from corporate vice president to the role of senior vice president and president of North America Sales & Marketing. Before joining Microsoft, Youngjohns held leadership positions at Callidus Software Inc., Sun Microsystems Inc. and IBM Corp. Meanwhile, Susan Hauser was promoted to vice president of Worldwide Industry and Global Accounts.
Unlike many other software companies, Microsoft is actively promoting from within. These moves also signal the importance of go-to-market sales roles.
NetApp Appoints New CMO
NetApp appointed Christine Heckart Chief Marketing Officer in February. She previously served as vice president and CMO of Worldwide Marketing for Juniper Networks and also worked at Microsoft. Heckart's general management and marketing skill set is broad and deep within the networking world.
Nuance Names New EVP and GM of Healthcare Business
Nuance Communications named Janet Dillione as executive vice president and general manager of its Healthcare business. Dillione comes to Nuance from Siemens Health Services where she served as CEO, overseeing 5,500 employees. This appointment is significant in three ways. First, it highlights the emergence of healthcare as a major impetus for growth. Second, the appointment of a woman in a major P&L in a fast-growth company. And third, it magnifies a trend in New England of fast-growth companies consolidating for strength versus being acquired.
Hitachi America Appoints Foreigner to CEO
In one of the most confusing moves of the first quarter, Hitachi America appointed Chiaki Fujiwara as president and CEO. What's interesting is that Fujiwara joined Hitachi's U.S. division in October 2008. The appointment begs the question: Were there no other executives with long-term U.S. market experience willing and available to take the helm?
Board Shake-Ups of Note
When it comes to board changes and trends, there are several moves-and key trends-of significance. This quarter, we'll highlight some major shakeups, resignations and trends, including internal board appointments, the consolidation of power in the executive suite and the boardroom, and more CIOs landing on boards.
Xerox Chairman Anne Mulcahy to Retire and Usrula Burns becomes Chairman and CEO
Anne M. Mulcahy, 57, will step down as chairman and director of the board at Xerox, effective May 20, 2010. Xerox CEO Ursula M. Burns, 51, will then assume the additional role of chairman. Mulcahy, became chief executive officer of Xerox on Aug. 1, 2001, and chairman on Jan. 1, 2002. She was previously president and COO of the company from May 2000 through July 2001 and started her Xerox career as a sales representative in Boston in 1976.
Apple Board Member Passes
In another blow to Apple's board, Jerome B. York, 71, has passed away. York was the chairman, president and CEO of Harwinton Capital, former CFO of IBM and Chrysler, and former vice chairman of Tracinda. Apple CEO Steve Jobs called him ‘a pillar of financial and business expertise and insight.' York had served on the board since 1997. York's passing comes just months after Google CEO Eric Schmidt stepped down from Apple's board, citing potential conflicts of interest between the two tech titans. Apple now has two key vacancies on its board and one of the smallest boards in the industry.
Yahoo Board Members Exiting
In late March, John Chapple, 55, said he would not stand for re-election to the company's board of directors. A former CEO of Nextel, Chapple joined Yahoo's board in 2008 when Carl Ichan was moving to organize a hostile takeover of the Internet company. His announcement comes at the heals of self-made billionaire Ron Burkle's decision not to stand re-election. Burkle, 56, has served on the company's board since 2001. His 2008 total compensation from Yahoo's board was $298,111. Yahoo also announced that Sue James was elected to the company's Board of Directors, effective January 2010. James brings extensive financial expertise and experience with a 35-year career at Ernst & Young. She was also named Chair of the Board's Audit Committee.
Symantec Board Nabs Former Intuit CEO
Symantec appointed Stephen M. Bennett, 54, former president and CEO at Intuit, to its board of directors effective Feb. 8, 2010. This brings the total number of directors on the board to 11. At Intuit, Bennett combined the company's historic innovative and customer-driven expertise with strategic and operational rigor. Intuit revenue grew to $2.7 billion in fiscal 2007 from less than $1 billion in fiscal 2000. Symantec is clearly getting an outstanding software executive and would like to benefit from his growth experience both from a strategic and operational perspective.
Autodesk Appoints Top 10 Wireless Woman to Board
Autodesk appointed Mary T. McDowell, 45, Nokia's executive vice president and chief development officer leading Corporate Development, to its board of directors. Prior to Nokia, Ms. McDowell had P&L responsibility at HP and Compaq.
EMC Board Audit Committee Swap
EMC announced the election of James S. Distasio, 62, a retired partner of Ernst & Young LLP. He replaced W. Paul Fitzgerald, 69 who was EMC's prior Chief Financial Officer. Fizgerald was named Director Emeritus.
IBM Appoints Heavy Hitter to Board
In February, IBM elected Andrew Liveris, 55, to its board of directors. Liveris is president and CEO of The Dow Chemical Company since 2004 and has served in various positions at the company for the past 33 years.
Board Recruiting Trends
Internal Appointments of Employee Non-CEOs
In the first quarter of 2010, the technology industry witnessed two internal board appointments of non-CEOs.
Compuware announced Robert C. Paul's election to the company's Board of Directors. Paul, 47, has served as President and COO of Compuware since 2008. Since taking this position, he has returned Compuware to revenue and margin growth. Peter J. Carmanos, 66, founder, remains as Compuware's CEO.
RealNetworks' board appointed Kimball, 46, as president and acting CEO after founder Rob Glaser, 47, stepped down as chief executive. Kimball was appointed to the board of directors. Glaser will remain chairman of the Board of Directors.
Sometimes the board position is a consolation prize for an exec who was vying-but not selected-as CEO. This type of appointment increases the power at the next level of management. There are several examples of this trend in the first quarter of 2010.
In Paul's case, Compuware's board is recognizing his increased role and the results of his turnaround efforts as COO. But the CEO spot remains firmly in the hands of the company's founder.
In Kimball's case, the board continues to search for a permanent CEO, but appointed him to the board in light of his continuing strategic contributions to the company as interim CEO.
Consolidation of Power
Another noteworthy trend is the consolidation of power of the Chair and CEO roles. There's nothing like an emergency situation to consolidate power into experienced hands.
One recent example is CA Chairman of the Board William McCracken taking over as CEO. Another example is PTC separating the positions of CEO and president and appointing C. Richard Harrison, 53, as Chairman and CEO of the company and James Hepplemann, 44, as president and COO. And Hasso Plattner at SAP is widely viewed as taking the helm although the CEO role is now split into the inside/outside leadership. This is also happening at Xerox where the Chair and CEO roles go to Ursula Burns.
CIOs Land on Software Boards
A third trend worth exploring this quarter is CIOs landing on technology boards. We've seen this at Compuware, EMC, ActivIdentity and Riverbed Technologies in the past few months alone. Compuware actually expanded the board size by one seat to make room for the new executive.
Risk is no longer just financial. Technology risk and a customer's perspective are two driving forces behind this trend, as solutions get increasingly complex, and as organizations increasingly rely on technology to operate.