Kieschnick to Quit as Arco President : Chief Architect of Restructuring Will Be Succeeded by Cook
William F. Kieschnick, Atlantic Richfield’s president, chief executive and architect of the company’s restructuring effort, will resign effective Oct. 15, the Los Angeles-based company announced Sunday after a board meeting in Anchorage, Alaska. The board chose Lodwrick M. Cook, 57, chief of Arco’s products division, as Kieschnick’s successor.
It had been rumored for about six weeks that Kieschnick, who is 62, would resign. Kieschnick denied those rumors in an interview with The Times a month ago, saying he had no plans to retire soon. “But that doesn’t mean I’ll wait to the last minute of the last hour,” he said in the interview.
The Arco board was scheduled to meet Monday at the headquarters of Arco Alaska in Anchorage, but the meeting was moved up a day because of its importance to the company, an Arco spokesman said. None of Arco’s executives or directors were available for comment Sunday.
Oil industry analysts expressed surprise at Kieschnick’s resignation. “I don’t think you can read anything into it other than what you see on the surface--that Kieschnick apparently wanted to resign,” said Todd Bergman, an analyst with Goldman, Sachs & Co. in New York.
M. Craig Schwerdt, an oil analyst with Morgan, Olmstead, Kennedy & Gardner in Los Angeles, said it appeared that Kieschnick’s motives may have been financial. Schwerdt said Kieschnick probably wouldn’t receive a bigger pension if he remained until age 65. And, as an outside director of the company, he would be paid, Schwerdt said.
Others doubted that Arco’s early retirement package, which adds five years to the age and service of an employee who resigns as of June 30, was a major factor in Kieschnick’s decision. By adding five years to Kieschnick’s service, he would be eligible for an additional $60,000 or so annually in pension, according to figures in Arco’s proxy statement. Under the early retirement package, Kieschnick’s pension would be about $480,000 a year. That’s more than Kieschnick would probably receive if he waited more than two years and retired at 65, with 37 years of service. Kieschnick, who spent his entire career at Arco, earns $825,000 in salary and incentive payments, according to the company’s most recent proxy statement.
The early retirement program is part of a vast, companywide reorganization announced eight weeks ago. Arco is closing or selling 2,000 East Coast gas stations, reducing its exploration efforts and repurchasing $4 billion worth of stock. The company has agreed to sell 400 of those stations to Shell Oil.
In a statement, Kieschnick, a former chemical engineer, said that the focus of the “new Arco” had been established and that “now is the ideal time to pass the baton of responsibility to a new management team.” He said he had “long contemplated an early start on his post-Arco adventures.”
In his three years as Arco’s chief executive, Kieschnick has dismantled the legacy of his predecessor, Robert O. Anderson, Arco’s chairman. Besides taking the company out of refining and marketing on the East Coast, Kieschnick consolidated Arco’s mining operations and put most of the metals businesses up for sale. Last year, the company took a $785-million write-down on the metals mining businesses. The company is taking a $1.2-billion write-down this year.
During that time, Kieschnick whittled Arco’s work force to 38,000 from 52,400 in late 1981 just before he took over as chief executive. By year-end, the work force is expected to shrink to 33,000 through retirements, possible layoffs and sales of unwanted businesses.
When Kieschnick became Arco’s chief executive in 1982, it was widely expected that he would succeed Anderson as chairman when Anderson turned 65. But the 67-year-old Anderson, Arco’s founder and a major shareholder, has shown no willingness to step aside although he is no longer involved in Arco’s day-to-day operations.
In a statement, Anderson said Kieschnick “played a major and constructive role in our company. . . . His accomplishments in defining our successful restructuring program and developing a successor management team will have a lasting impact on the company.”
Cook, 57, has been a director of Arco since 1980 and chief operating officer of the products division--the unit responsible for Arco’s refining and marketing operations--since last May. An engineer, he coordinated construction of the trans-Alaska pipeline.
The Arco board made two other appointments: It selected Robert E. Wycoff, 54, to replace Cook as chief of the products division and named both Wycoff and Ralph F. Cox, 53, as vice chairmen. Cox is chief operating officer of the resources division. An Arco spokesman said Wycoff’s old job as chief corporate officer “probably wouldn’t be filled.”