The list of former CEOs is a long one, and has grown substantially as a result of the global financial crisis. Investors find it easy to remember such names as John Thain, G. Kennedy Thompson, Charles O. "Chuck" Prince III, James E. "Jimmy" Cayne and E. Stanley "Stan" O'Neal.
Needless to say, the memories aren't always pleasant.
During the past several years, the departure of a company's chief executive was almost always a sign of a company in the midst of a shakeup - and an admission that there was a long list of deeply ingrained problems to solve.
Few of the departures were truly voluntary, and the financial-crisis-induced ousters usually stoked the turmoil: They almost always came at a surprising time, and there was almost never a successor in place who could step in and quell the uncertainty by immediately taking over.
This week's departure of Daniel Vasella seemed to share some of those qualities:
- It was a surprise - when Vasella stepped down as CEO of Novartis AG (NYSE ADR: NVS) early this week, it did catch investors off guard.
- And it did signal a shakeup to come at the drug-making giant.
But that's where the similarities end. Vasella's departure as CEO wasn't a crisis-induced ouster. In fact, this top-tier change may one day serve as a Harvard Business School case study as the right way to engineer an executive transition.
Investors may even find that the move was made for all the right reasons.
Vasella, 56, is known as an executive who likes to "shake things up," and now he's doing that at Novartis, the Swiss pharmaceutical giant whose tight management and success in tough situations could show a thing or two to some of its wheezing industry peers.
Novartis was the company that resulted from the merger of two under-performing Swiss drugmakers: Sandoz and Ciba-Geigy. In fact, it was Vasella - a noted strategist and one of the few medical doctors to actually lead a major pharmaceutical firm - who engineered the combination and then transformed the resultant company into a global-drug-industry powerhouse, Forbes magazine reported. It stands as one of the few successful mergers in the pharmaceutical industry.
The company has some major strategic decisions to make - and some new businesses to explore - and Vasella thought it would be better if those initiatives were headed by a CEO who would be there to see them all the way through - not someone who might one day retire before they were completed.
And though he's stepping down as CEO, Vasella will remain in place as chairman, a position that will have him focus on strategy. And he didn't leave the question of succession open: Vasella appointed the 50-year-old head of Novartis' pharmaceutical business - Joseph Jimenez - to be succeed him as CEO.
Jimenez graduated from Stanford University with a BA degree in 1982, and then earned an MBA from the University of California at Berkley. He started his career with The Clorox Co. (NYSE: CLX), then moved on to ConAgra Foods Inc. (NYSE: CAG), and finally joined The H.J. Heinz Co. (NYSE: HNZ) in 1998.
The executive was named president and CEO of the company's North American business unit, and from 2002 to 2006, served as president and CEO of Heinz's business in Europe. He joined Novartis in 2007.
Vasella told Forbes that Jimenez has an unusual ability to inspire the workers and is able to help them very clearly envision the direction he wants them to travel. Those abilities, or talents, are the reason he was the top choice for the CEO's job.
"Joe is able to set clear objectives and mobilize the people," without making them feel they are being ordered around, Vasella told an interviewer. "He has composure under pressure, he doesn't lose his temper and he has a sense of humor."
News and Related Story Links:
- Wikipedia:
John Thain - Money Morning News Analysis:
Boom, Bust and Rebuild: Bank of America and the Kenneth Lewis Legacy - Money Morning News Analysis:
Wachovia CEO Thompson Shown the Door After 32 Years of Service, WaMu's Killinger Steps Down as Chairman
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.