And Waiting in the Wings?
It’s not your everyday job listing.
With the ouster of Boeing Co. Chief Executive Harry C. Stonecipher, the aerospace giant suddenly needs a captain who not only can run a $52-billion company, top defense contractor and major airplane manufacturer but also can burnish the company’s scandal-tarnished image and lift the sagging morale among its 159,000 employees.
Yet, although Stonecipher’s departure was abrupt, Boeing already was compiling a list of possible successors, because Stonecipher, 68, was due to relinquish the post next year. He had come out of retirement in late 2003 to become interim CEO when his predecessor, Philip Condit, was forced out in response to Boeing’s growing defense procurement scandals.
“We have a good place to start” in evaluating candidates, Lewis Platt, Boeing’s nonexecutive chairman, said in a conference call Monday.
Chicago-based Boeing will look at both internal and external candidates and hopes “to complete the process as quickly as we can,” Platt said. He declined to divulge any names.
Stephen Mader, a vice chairman of executive search firm Christian & Timbers in Boston, said Boeing’s directors “absolutely have to go outside and get a fresh face” to turn the company around. “This is an American icon that’s getting killed here,” he said, adding that experience in aerospace or defense wasn’t required.
He cited the turnaround of IBM Corp. by Louis Gerstner Jr., who became CEO in 1993 after executive stints at RJR Nabisco and American Express Co. “It’s all about providing direction and leadership,” Mader said.
Platt said that the Boeing job would go to someone with “broad experience as a senior leader of a large company” and that the new CEO could hold the job for a decade if need be. That means that Stonecipher’s successor would probably have to be in his or her mid-to-late 50s or younger.
Boeing did say that its chief financial officer, James A. Bell, 56, who was named interim CEO, wasn’t a candidate to replace Stonecipher.
Who is? Two senior Boeing executives -- James Albaugh and Alan R. Mulally -- are among the favorites, analyst Byron Callan of Merrill Lynch & Co. said in a report to clients Monday.
Another analyst, George Shapiro at Smith Barney, said in a note to clients that a leading outside candidate would be W. James McNerney Jr., who is chairman and CEO of 3M Co. and a member of Boeing’s board.
A look at the three:
* Albaugh, 54, a 29-year Boeing veteran, runs the defense business, called Integrated Defense Systems, which also includes the commercial satellite and rocket divisions and accounts for $30 billion of the company’s annual revenue.
Albaugh was thought to be on the CEO fast track until two years ago, when Boeing’s ethics scandals mushroomed. But some observers have noted that the scandals occurred before Boeing made several reorganizations that combined those divisions under Albaugh.
* Mulally heads the commercial aircraft business and is among the senior Boeing executives who haven’t been implicated in the scandals.
But the Kansas native has had his own problems. Amid a long slump in commercial aviation, Mulally has watched Europe’s Airbus displace Boeing as the leading producer of jetliners. And although Mulally has 35 years on his resume at Boeing, another potential strike against him is his age: He’s 59.
(If Boeing chooses Albaugh or Mulally, it’s possible the loser would leave the company to seek a CEO job elsewhere, Callan wrote, adding that if an outsider was tapped, “it is also possible that one or both departs.”)
* McNerney, who has an aerospace background, was approached to be Boeing’s CEO when Condit quit but declined.
A spokeswoman for 3M, Jacqueline Berry, said Monday that renewed talk about McNerney’s changing jobs was “absolute speculation” and that “he is very happy at 3M and has no plans to leave in the foreseeable future.”
McNerney, 55, went to 3M after being passed over to succeed Jack Welch as CEO of General Electric Co. in 2000. McNerney had headed GE’s aircraft engines unit, which makes engines for jetliners, among other products.
Other possible candidates some analysts mentioned:
* William Swanson, chairman and CEO of major defense contractor Raytheon Co.
Swanson, 56, earned his bachelor’s degree from Cal Poly San Luis Obispo in 1972, then joined Raytheon and has been with the company ever since.
That loyalty might impede his desire to leave his company, which has $20 billion in annual revenue. So could the fact that Swanson has been Raytheon’s CEO for less than two years, some observers said privately.
A Raytheon spokesman quoted Swanson as saying it would be “inappropriate to comment on Boeing matters.”
* David Calhoun, who like McNerney was thought to be a candidate for Boeing’s top job two years ago and is so again.
Calhoun, 47, is CEO of General Electric’s transportation group, which includes its jet engine unit.
A GE spokesman declined to comment.
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(BEGIN TEXT OF INFOBOX)
Troubled times for Boeing
* Dec. 1, 2003: Chief Executive Phil Condit resigns in the wake of scandals involving Pentagon contracts, including those for Air Force aerial refueling tankers and rockets. Harry C. Stonecipher is brought out of retirement to run Boeing.
* May 11, 2004: Sen. John McCain (R-Ariz.), Boeing’s staunchest critic in Congress, holds up Pentagon nominations and threatens to seek a subpoena for Air Force documents on the tanker deal.
* Oct. 1: Former Pentagon official Darleen Druyun, who acknowledged favoring Boeing on contracts, is sentenced to nine months in prison after admitting she accepted a $250,000-a-year job with Boeing while still overseeing its contracts with the Department of the Air Force.
* Oct. 8: U.S. House and Senate negotiators kill the Air Force’s $23.5-billion plan to acquire Boeing 767s for use as tankers.
* Nov. 16: Air Force Secretary James G. Roche resigns.
* Feb. 18: Michael Sears, Boeing’s former chief financial officer, is sentenced to four months in prison and fined $250,000 for his role in illegally recruiting Druyun.
* March 3: Boeing’s stock hits its highest level in more than 3 1/2 years, bolstered by optimism that its commercial jetliner business will win a 40-plane contract with Indonesia’s Lion Air.
* March 4: The Air Force reinstates Boeing’s eligibility to vie for government satellite-launching work, ending the longest suspension of a major defense contractor.
* March 7: Boeing’s board discharges Stonecipher for having an affair with a female executive that Chairman Lew Platt says showed “poor judgment that would impair his ability to lead.”
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Source: Reuters
Los Angeles Times
