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Turnaround CEOs

  1. 1/12/2021 1 Welsh Consultants TURANAROUND CEOs A PERSPECTIVE
  2. 1/12/2021 2 Welsh Consultants BEST TURNAROUND CEOs FOREWORD Whether it’s running a multinational company or a family business, being the CEO requires a special set of skills. The demands are even greater for those taking the helm at a struggling company. A turnaround boss needs to have a clear action plan and goals, a realistic timeline, and the support of the company’s board and senior managers. Even the best strategy, however, needs to be accompanied by financial results, whether it’s greater market share, larger profits, a higher stock price, or preferably all three. Few can rival the success of Apple’s Steve Jobs, who returned to the company he founded, transforming it into the most profitable technology player in the world. So which CEOs have succeeded where others have not? CEO
  3. 1/12/2021 3 Welsh Consultants BEST TURNAROUND CEOs PETER CUNEO- MARVEL ENTERTAINMENT Peter Cuneo joined Marvel Entertainment just after it emerged from bankruptcy protection, with a heavy debt load, limited cash, and a depressed corporate culture. He focused on expanding the company’s international business and adopting a licensing model for movies, TV, and consumer products. Movies based on its characters became cash-cow blockbusters. Cuneo also rejuvenated Marvel’s core comic book business, bringing in new talent for both writing and illustration. When he took the reins of Marvel, its stock was at 94 cents a share; 10 years later (with Cuneo as vice chairman) the company was sold to Walt Disney for more than $4 billion, or $54 a share. Prior to joining Marvel, Cuneo orchestrated successful turnarounds at Remington, divisions of Clairol, and Black & Decker. Tenure- July 1999- Dec 2002
  4. 1/12/2021 4 Welsh Consultants RICHARD CLARK- MERCK & CO Richard Clark, a 35-year Merck & Co. veteran, took the helm amid the legal battle over Vioxx, the company’s $2.5 billion-a-year arthritis drug, which had been pulled from the market because of links to heart attacks and strokes. Clark made staff cuts and closed five manufacturing plants in a bid to save nearly $4 billion by 2010. He streamlined management and marketing, and focused energy on Merck’s promising pipeline of new drugs. Clark restored the company’s reputation, settled Vioxx litigation for $5 billion, and oversaw the approval of eight drugs in two years. By 2008, Merck’s share price was back at pre-Vioxx highs and almost double its April 2005 price. Tenure- May 2005-Dec 2010 BEST TURNAROUND CEOs
  5. 1/12/2021 5 Welsh Consultants Gordon Bethune joined the company when it was emerging from Chapter 11 bankruptcy protection. At the time, Continental Airlines was losing $55 million a month and consistently ranking last in every measurable performance metric, including on-time performance, customer complaints, and mishandled baggage. Under Bethune, the carrier eliminated unprofitable routes, increased service from its hubs, renegotiated debt and leases, and put in place an incentive pay plan that helped dramatically improve the Houston-based carrier’s record for landing flights on time. Under his leadership, Continental’s stock price rose from $2 a share to more than $50 a share. It now is consistently ranked among the top airlines in customer satisfaction. Tenure- Nov 1994-Nov 2004 BEST TURNAROUND CEOs GORDON BETHUNE- CONTINENTAL AIRLINES
  6. 1/12/2021 6 Welsh Consultants SERGIO MARCHIONNE- FIAT CHRYSLER When Sergio Marchionne entered as CEO, the company was deep in debt and losing money. He closed factories, cut jobs, and replaced top management in a bid to increase market share and turn losses into profits. Marchionne also secured a deal with Chrysler and negotiated an end to a bitter partnership with General Motors that netted Fiat $2 billion. Within two years, Marchionne saved the Italian company from collapse and expanded operations to India and China. After 17 consecutive quarters of losses, Fiat’s auto unit finally turned a profit in 2005. Marchionne’s turnaround continues with a revamped lineup of trucks and cars, including the Fiat 500 — a tiny, stylish 21st century version of a 52-year-old Italian icon once driven by movie stars such as Marcello Mastroianni and Sophia Loren. Tenure- June 2007-July 2018 BEST TURNAROUND CEOs
  7. 1/12/2021 7 Welsh Consultants MARK HURD- HEWLETT PACKARD Mark Hurd took over for Carly Forina, a high profile but highly controversial CEO. He is best known for stabilizing the integration of Hewlett-Packard’s messy 2002 acquisition of Compaq Computer. Hurd sharpened HP’s strategic focus, concentrated its investments in technology, and steered a broad transition from analog to digital imaging. To improve operating efficiency, he made staff cuts and companywide pay cuts. Hurd decentralized the sales force and placed emphasis on training, field hiring, and customer support. The company’s stock quickly reversed from a slump. Between its 2006 and 2009 fiscal years, HP grew revenue from $80 billion to $114.6 billion, and more than doubled its earnings per share. Despite his business acumen, Hurd was forced to resign because of expense account irregularities. Tenure- March 2005-Aug 2010 BEST TURNAROUND CEOs
  8. 1/12/2021 8 Welsh Consultants TERRY S SEMEL- YAHOO The longtime Warner Bros. veteran took over Yahoo at a time when morale and ad sales were plummeting amid the dot-com implosion. Semel replaced the popular senior executive and one-time heir apparent Timothy Koogle, while having to answer questions about his lack of experience in Internet technology. He led the turnaround by strengthening Yahoo’s consumer product marketing and distribution. He also tried to move the company from an online advertising model to a fee-based one. Semel launched a deal with phone giant SBC Communications (now AT&T), selling broadband access to millions of American homes. Semel silenced doubters when the company earned $43 million on revenue of $953 million in 2002, reversing a $93 million loss on $717 million in revenue in 2001. Tenure: May 2001- June 2007 BEST TURNAROUND CEOs
  9. 1/12/2021 9 Welsh Consultants LEE IACOCCA- CHRYSLER After being fired as president of Ford Motors in 1978, Lee Iacocca tackled rescuing Chrysler Motor — an American icon on the brink of bankruptcy. Iacocca renegotiated contracts with car-rental agencies, laid off workers, and secured $1.5 billion in federally backed loans as part of a historic government bailout. He succeeded in reviving Chrysler, starting with the compact to mid-sized K-car line in 1981. He followed that success with the first minivans, the Dodge Caravan and Plymouth Voyager, which set the standard for family-friendly transportation. In 1983, Chrysler earned $925 million, and was able to pay back the government loans. Tenure- 1979-1992 BEST TURNAROUND CEOs
  10. 1/12/2021 10 Welsh Consultants JAMES CANTALUPO- McDONALD’S James Cantalupo, who had retired as president of McDonald’s International in 2001, was lured out of retirement to reverse McDonald’s two-plus years of sagging U.S. sales. The fast-food chain had developed a reputation for unhealthy food, which didn’t fit well with consumers seeking a healthier lifestyle. Cantalupo addressed the needs of health-conscious consumers by introducing salads, apple slices, and a low-carb menu in select markets. Sales began a steady march higher, as did the company’s earnings and share price. By early 2003, Cantalupo’s success was evident. First-quarter net income was $327.4 million, versus $253.1 million a year earlier. The stock began a long steady ascent. Tenure: 2002-2004 BEST TURNAROUND CEOs
  11. 1/12/2021 11 Welsh Consultants STEVE JOBS- APPLE Steve Jobs, co-founder of Apple, returned to the company in 1996 to become interim CEO after its purchase of NeXT, Jobs latest venture. He became Apple’s permanent CEO in 2007. Early on, Jobs helped the cash-strapped company secure a $150 million investment from rival Microsoft in return for non-voting shares — and an assurance that Microsoft would support its Office software on the Mac platform for five years. Jobs streamlined the product line, opened stores to sell directly to consumers, cut operating expenses, and focused marketing on personal computers. He also led an early move into online music, which helped establish the iPod, and reinvented the mobile phone business with the iPhone. Jobs resigned as CEO in August 2011, and he died of pancreatic cancer three months later. Tenure- 1996-2001 BEST TURNAROUND CEOs
  12. 1/12/2021 12 Welsh Consultants MICKEY DREXLER- GAP Gap was facing intense competition when Mickey Drexler took over in 1995. His turnaround plan included the decision to stop selling Levi’s jeans and other non-brand items. Drexler focused on selling Gap-only apparel that appealed to older, higher-income customers. He reinvented the product line, redesigned stores from floor to ceiling, and ushered in breakthrough ad campaigns. Drexler introduced stylish but affordable clothing, and built the Gap into a $14.5 billion company. The company also acquired Banana Republic and launched Gap Kids and Old Navy — the last of which Drexler grew to a billion-dollar company in four years. Under Drexler’s leadership, sales at Gap leaped to $9.1 billion in 1999 from $6.5 billion a year earlier. Drexler was fired from the Gap in 2002 when its stock took a major plunge — but has since taken the helm at J. Crew. Tenure- 1995-2004 BEST TURNAROUND CEOs
  13. 1/12/2021 13 Welsh Consultants CARLOS GHOSN- NISSAN Carlos Ghosn is a Brazilian-born businessman who also has French and Lebanese nationality. Ghosn has served as the CEO of Michelin North America, chairman and CEO of Renault, chairman of AvtoVAZ, chairman and CEO of Nissan, and chairman of Mitsubishi Motors. Ghosn was also chairman and CEO of the Renault–Nissan–Mitsubishi Alliance, a strategic partnership among those automotive manufacturers through a complex cross-shareholding agreement. In 1996, Renault's CEO Louis Schweitzer hired Ghosn as his deputy and charged him with the task of turning the company around from near bankruptcy. In the early 2000s, for orchestrating one of the auto industry's most aggressive downsizing campaigns and spearheading the turnaround of Nissan from its near bankruptcy in 1999, he earned the nickname "Mr. Fix It". BEST TURNAROUND CEOs
  14. 1/12/2021 14 Welsh Consultants THANK YOU