WSJ: CNC hires Wendt " to TURN AROUND CNC "( and NOT to liquidate it ).
interactive.wsj.com
June 28, 2000
Conseco Taps GE Capital's Wendt
To Turn Around Beleagured Firm
By DEBORAH LOHSE, JOANN S. LUBLIN and MATT MURRAY
Staff Reporters of THE WALL STREET JOURNAL
Conseco Inc. has selected Gary C. Wendt, the man credited with turning
GE Capital Services into a financial-services powerhouse, as the chief executive
to turn around the beleaguered financial company, say people close to Conseco.
Conseco's board, headed since late April by David Harkins, president of Conseco
investors Thomas H. Lee Partners, is expected to vote as early as Wednesday morning
on the selection of Mr. Wendt as chief executive, these people say, and announce
the deal soon thereafter. A Conseco spokesman declined to comment Tuesday,
and Mr. Wendt couldn't be reached.
Mr. Wendt, known as an intelligent, hard-driving and sometimes prickly manager,
has met with Conseco management a number of times, these people said,
but negotiations were stymied partly by a noncompete agreement he signed with his former employer.
The noncompete issue has been resolved, say people close to the matter,
thanks to a last-minute release by General Electric Co. Chairman and CEO John F. Welch Jr.
As part of the negotiations to release Mr. Wendt from the noncompete agreement,
GE could get a small stake in Conseco, said the people familiar with the matter.
A spokeswoman at GE, whose chairman praised Mr. Wendt even as Mr. Wendt
was leaving a year and a half ago, declined to comment.
Conseco which, at $55.5 billion in assets, is less than one-sixth the size of $345 billion-in-assets
GE Capital, has been seeking a CEO since late April, when the Carmel, Ind.,
insurance and finance company's founder Stephen Hilbert resigned, along with
chief financial officer Rollin Dick. The pair said when they resigned that investors
had lost confidence in their credibility after a series of earnings-related surprises
stemming from the firm's costly acquisition of sub-prime lender
Green Tree Financial Corp., later renamed Conseco Finance.
Conseco has also been trying to find a buyer for its Conseco Finance
consumer-lending unit, and
desperately needs a leader with Mr. Wendt's proven credibility and financial savvy,
analysts say. The executive-search firm Heidrick & Struggles International Inc.
conducted the search.
"They need a high profile name to re-establish and rebuild the organization,"
said Larry Mayewski, an analyst at A.M. Best Co., which downgraded
14 Conseco insurance units earlier this month based on uncertainty about the
sale of Conseco Finance and weak operating results at the insurance units.
At Conseco, Mr. Wendt will need to focus "on new distribution outlets and revenue challenges,"
as well as "making sure expenses in the organization are scrutinized very closely," said Mr. Mayewski.
"If anyone can go in there and turn it around, it would be Gary," said Brooks Chamberlain,
head of Korn/Ferry International's global insurance practice.
"He's an extremely smart, disciplined individual who knows how to make money in insurance,"
the recruiter added.
Mr. Wendt won credit for building what had been a relatively small piece of GE,
its finance business, into an international financial powerhouse that rivaled
the biggest banks in the nation.. The strategy had been devised by a
handful of executives, including Mr. Wendt, during the late 1980s,
but the bulk of the growth occurred after Mr. Wendt took the helm of GE Capital in 1990.
By the time he left in December 1998 amid some friction with Mr. Welch,
GE Capital had become the biggest single piece of the company and
a growth engine with nearly 30 separate financial businesses.
Mr. Wendt also gained notoriety for a bitter and very public divorce in 1997. |
