A Defining Role for Karcher : Scholars, Other Chairmen Emeritus Say Each Exec Molds the Job Differently

After stepping down as chairman of Pacific Mutual Life Insurance in 1987, Walter Gerken had time on his hands. So the retiring but definitely not shy executive eventually took to his feet.

“My wife gave me 10 tap dancing lessons last summer when I was 71,” Gerken said. “It’s crazy, but I wanted to do it. . . . Believe me, Greg Hines is safe.”

Finding a new role has not been as pleasant for one of Gerken’s longtime friends, fast-food pioneer Carl N. Karcher. The Carl’s Jr. restaurant chain founder, ousted Oct. 1 as chairman of parent company Carl Karcher Enterprises, is now poised to return as chairman emeritus, an advisory role.

“He’s been through a lot of tough stuff lately,” Gerken said in reference to Karcher’s bitter feud with his handpicked board of directors. “But he’s going to make a great representative for his company.”

Karcher would not comment on what he expects to do in his new position. His allies acknowledge it will be difficult for the company founder to accept a passive role.

However, Karcher could have a difficult time reasserting his authority even if he wants to. That’s because he has effectively relinquished control of Karcher Enterprises and is dependent upon others to dictate company strategy.

Also, Karcher’s backers have restructured his personal bank debts in such a way that he is likely to remain financially obligated to them, giving them major influence over Karcher’s actions at the company.

Though numerous books have been written on how to make a graceful exit from the executive suite, there’s no guaranteed formula for a smooth transition, said Jeffrey A. Sonnenfeld,director of Emory University’s Center for Leadership and Career Studies and the author of one such tome.

The strategies, Sonnenfeld wrote in “The Hero’s Farewell,” range from that of “the monarch” who can’t leave gracefully to that of “the ambassador” who slips away quietly without disrupting business.

Gerken’s exit easily fits into the ambassador category, Sonnenfeld said. With Karcher, “it looks like you’ve got a monarch who was overthrown but staged a coup in order to return.”

Karcher Enterprises’ board vote last Wednesday to embrace Karcher as chairman emeritus “makes it look as if there wasn’t the harmony or prescience to stage the ambassadorial type of departure,” Sonnenfeld said. “So they’re now trying to retrofit it.”

In most cases, chairman emeritus is the ideal position for executives who aren’t ready to be put out to pasture, said Eric Flamholtz, a professor at the USC Graduate School of Management. Generally, the position is transitory, diminishing as the new chair assumes control.

But the job description varies widely and is often a reflection of the individual executive’s outlook and personality.

Mary Kay Ash, founder and chairwoman emeritus of Mary Kay Cosmetics, provides “inspiration and motivation” rather than handling day-to-day management tasks, company spokesman Dwight Smith said.

“She’s the keeper of a very unique corporate culture,” Smith said. “Her standards are the standards by which everyday business is measured.”

By contrast, Publisher William B. Ziff Jr., who recently became chairman emeritus of Ziff Communications in New York after nearly 40 years at the helm, is using his new-found time to explore interests in art and literature, philosophy and football.

Ziff, who retired in November, said he wants to remain active in the company but not exercise any real authority.

As for Karcher, whose energy astonishes younger executives, he would probably take umbrage at the first dictionary definition of emeritus: “serving out one’s time.” But the 76-year-old entrepreneur, who built a 649-unit chain from a single hot dog cart, might be comfortable with the second definition: “retired from active service, usually for age, but retaining one’s rank or title.”

Rank and title are important to Karcher. Associates and friends say there are three passions in his life: family, religious and charitable obligations and his business. Take away one of those, a longtime associate said, and Karcher will respond “like a caged tiger.”

Karcher will also be unusual among chairmen emeritus because his family still holds an 18% stake in the company and he remains on the board of Karcher Enterprises.

“He’s been around for 52 years. He’s got a tremendous wealth of experience,” said Flamholtz, the USC professor. “Keeping him is a smart thing to do, like keeping Lee Iacocca at Chrysler.”

Karcher will be content as chairman emeritus, said Andrew Puzder, his personal attorney.

“Carl is not interested in operating the company, but he’s still a director, he still has a fiduciary responsibility.”

And Karcher carries a founder’s deep-rooted interest in his company’s strategic direction. As recently as Dec. 3, he threatened to rally shareholder support to kick out the current board.

Given that recent bitterness, “the important thing is that everyone have a clear understanding of what Carl’s role and responsibilities are going to be,” said Larry Wangler, a consultant with Towers Perrin in Irvine who has crafted executive compensation packages for Karcher Enterprises.

Karcher understands that the chairman emeritus role is “more a position of distinction than of operational involvement,” Puzder said. “The difference will be that people will ask Carl for input on how things might best be done, instead of Carl telling people how things should be done. And I think Carl’s prepared for that.”

If Karcher comes to grips with the job’s limitations, he’ll probably succeed as chairman emeritus, some of his peers say.

“Carl did the same thing I did, which is give birth to a company and work his ass off for years to make it grow,” said Alan Rypinski, founder and chairman emeritus of Armor All Products Corp. in Laguna Niguel. Rypinski, 54, sold Armor All to McKesson Corp., founded another firm and is developing a third business.

“I think Carl, a very bright guy, understands that he has to move along and let new ideas and strategies take over.”