Finkelstein to Step Down as Macy’s Chairman : Retailing: His top lieutenants will head the chain that owns Bullock’s and I. Magnin.
R. H. Macy & Co. Chairman Edward S. Finkelstein, the shrewd marketer who led the retailer’s dazzling revival in the 1970s but then oversaw its collapse into debt and Chapter 11 bankruptcy three months ago, abruptly announced Monday that he is retiring from the company where he spent his entire career.
The move, which set off a speedy management shake-up at the famous department store chain, came just a week after Macy’s outside directors took control of the board, significantly reducing Finkelstein’s power and authority.
Finkelstein, 67, will be succeeded by his top lieutenants, Myron E. Ullman III, 45, the former vice chairman and chief operating officer, and Mark S. Handler, 59, the former president and chief merchandising officer. The two will each have the titles of co-chairman and co-chief executive of the company, the parent of the Macy’s, Bullock’s and I. Magnin department stores.
The changes at Macy’s are the second executive suite shake-up inspired by non-company members of a board of directors. Earlier this month, outside directors of General Motors demoted President Lloyd E. Reuss and stripped Chairman Robert C. Stempel of some of his responsibilities because of increasing frustration over the auto maker’s problems.
Although Finkelstein’s departure was expected in light of Macy’s continuing problems since filing for bankruptcy reorganization in late January, it came far more quickly than many analysts had expected.
The stepped-up timing set off widespread speculation that Finkelstein was forced to step down by an unhappy board of directors--many of whom are Macy’s investors and stand to lose millions as a result of the bankruptcy--as well as Finkelstein’s own lieutenants, who were frustrated with the retailer’s continuing problems under his iron-handed management.
“Finkelstein was driven and blinded by his own ego,” said Kurt Barnard, publisher of a retailing newsletter in New York. “Under his rule, it was business as usual, and that was what had gotten them into trouble to begin with. . . . Suppliers and bankers should be happy that Ullman will impose more discipline and financial responsibility on the company.”
Although the precise sequence of events leading up to Monday’s announcement remains difficult to piece together, it appears that they were set in motion at the April 20 meeting of Macy’s 16-member board.
That morning, Finkelstein was quoted in Women’s Wear Daily, the Bible of the fashion and retailing industry, as saying that management had the “strong support” of the board and that he was pleased that the company was “entering a period of stability.”
However, later in the day, the board voted to invoke a clause in the 1986 leveraged buyout agreement giving outside directors a majority in the event of a bankruptcy filing. The seven outside board members ousted from their board seats six company employees considered loyal to Finkelstein, leaving Finkelstein, Handler and Ullman as the only company employees serving as directors.
Finkelstein, who engineered the $3.58-billion debt-financed takeover that ultimately plunged Macy’s into bankruptcy, told board members Saturday of his decision to step aside. Within hours, Ullman and Handler said they proposed that they share Finkelstein’s former posts. The board approved the moves Monday morning.
“The administration of the company is essentially the same,” said Handler, who has worked with Finkelstein for more than three decades. “Macy’s is not going to change direction suddenly because of our stewardship.”
Macy’s said Handler’s primary focus will be merchandising, marketing and sales promotion, while Ullman’s responsibilities will be operations and corporate functions.
Although Finkelstein has been praised for his merchandising ability and for revitalizing the retailer’s flagging image in the 1970s, he was criticized for plunging the company into debt with the 1986 buyout and compounding the problem with the $1.1-billion acquisition of the I. Magnin and Bullock’s chains in 1987.
