Thank God, Otellini will not go to Texas
Recruiting Duel: Headhunters Vie
To Fill Top Slots at Tech Giants
By JOANN S. LUBLIN and GARY MCWILLIAMS
Staff Reporters of THE WALL STREET JOURNAL
Wanted: Visionary chief executive for a computer giant.
Wanted: Visionary chief executive for a computer giant.
That's no misprint. In the nation's most closely watched corporate
manhunt, PC rivals Hewlett-Packard Co. and Compaq Computer Corp.
are both looking outside their ranks for a CEO for the first time. Each is
scrambling to snare a superstar first, after pursuing some of the same prey
for weeks.
At H-P, highflying insider Ann Livermore and
a handful of high-tech outsiders are vying to
succeed long-time leader Lewis D. Platt, who
announced his retirement plans in early March.
Compaq's front-runners to succeed Eckhard
Pfeiffer, ousted in late April, include AT&T Corp. President John D. Zeglis
and Continental Airlines President Gregory Brenneman.
Ms. Livermore, the 40-year-old president of H-P's $15 billion computer
systems, services, software and support business, has acknowledged that
she is on its short list of CEO prospects. Last week, Compaq Chairman
Benjamin M. Rosen said the company will name a new chief "in the
not-too-distant future."
The CEO sweepstakes are turning into a war between two hungry
headhunters. Hewlett-Packard ignored veteran kingmaker Gerard Roche
in favor of technology specialist Jeffrey Christian. The 43-year-old
president of Cleveland's Christian & Timbers has never nabbed a big
business leader before. "For the past couple of years, I've been nipping at
the heels of the likes of Gerry Roche," Mr. Christian says. "My
competitors are scared to death that they're losing a business they had a
monopoly on," he adds.
Compaq tapped Mr. Roche, the 66-year-old senior chairman of Heidrick
& Struggles International Inc. He has helped find the heads of AT&T,
International Business Machines Corp., Apple Computer Inc. and other
major corporations. Mr. Roche and colleague John Thompson hope to
upstage their competitor despite his six-week head start.
One complicated wrinkle: Hewlett-Packard hired Mr. Thompson, a
Heidrick & Struggles vice chairman, to seek a chief operating officer for its
nearly $8 billion test and measurement business, which will be split off
soon.
"I tried to talk to him and give him some [H-P CEO] candidates I ran into,
but he's not talking to me," Mr. Christian says. For the spinoff COO
assignment, Mr. Thompson retorts, "the candidate pool is totally different."
Mr. Roche initially expected little overlap between the parallel searches.
By mid-May, he had changed his tune. "Jeff is bumping into some of the
same people," Mr. Roche groused to an industry analyst.
H-P and Compaq have both eyed or courted such high-tech stars as:
Samuel Palmisano, an IBM senior vice president; Edward Zander, the
second highest executive at Sun Microsystems Inc.; Kevin B. Rollins, a
vice chairman of Dell Computer Corp.; and Paul Otellini, an Intel Corp.
executive vice president and general manager of its group that makes
microprocessors and related chips and components.
Mr. Palmisano says he intends to stay put. The rest decline to comment
about whether they will jump ship.
None could be dislodged easily. Some recruiters say Mr. Palmisano, the
46-year-old head of IBM's $30-billion global services division, has a good
shot at ascending to the company's top perch in a few years.
Tight Golden Handcuffs
Sun recently hardened its grip on Mr. Zander by giving the chief operating
officer the added title of president and promising a juicier pay package.
Mr. Rollins's golden handcuffs are even tighter. The 46-year-old former
management consultant held 8.3 million unexercisable stock options worth
$385.5 million as of Jan. 29, Dell's latest proxy statement says.
Complicating matters for Compaq's search, Mr. Rosen, its chairman, has
been busy remaking the company since Mr. Pfeiffer's departure. He
recently oversaw a major reorganization of operating divisions that
changed a lot of executive jobs. Compaq has also entered talks to sell its
Alta Vista search engine for a stake in Internet investment firm CMGI Inc.
Such big moves typically are left for a new CEO to undertake. But a
spokesman said Wednesday that Mr. Rosen explained at the start of the
transition that he and the two other directors occupying an interim "office
of the chief executive" wouldn't merely act as "caretakers" during the
search process.
An additional problem for Houston-based Compaq is that some Silicon
Valley executives refuse to consider a Texas relocation -- especially when
a corner-office vacancy looms at Hewlett-Packard in Palo Alto, Calif. Mr.
Otellini, a 25-year Intel veteran assigned to the semiconductor maker's
Santa Clara headquarters, deflected Compaq's feelers because he is
"deeply rooted to the Bay Area," a West Coast venture capitalist says.
Mr. Otellini, whose Intel operation accounted for 82% of its 1998
revenue, remains a prime contender for H-P. Members of the board's
search panel have interviewed him.
'Have the Edge'
Based on Hewlett-Packard's geography and financial health, "I have the
edge," Mr. Christian says. The California concern handily beat analysts'
earnings estimates for the quarter ended April 30. By contrast, Compaq
warned last week that it will post a loss of as much as 15 cents a share in
the second quarter.
The Compaq hunt is lasting longer than analysts anticipated, as the world's
biggest PC maker casts its net even further afield from the computer
business. Compaq recruiters have approached General Motors Corp.'s
Louis R. Hughes, for instance.
Since GM named him executive vice president for new-business strategies
last fall, Mr. Hughes has been exploring ways to use technology better. He
previously headed GM's international operations, but was passed over for
a top job in October after a GM reorganization. That put him in play as a
CEO candidate. UAL Corp. considered him for its top slot before giving
that job to an insider.
Among the computer-industry outsiders competing for the top Compaq
job, Messrs. Zeglis and Brenneman are stronger prospects. An unnamed
West Coast executive from outside the technology sector has also
emerged as a serious contender.
Compaq is aggressively courting the 52-year-old Mr. Zeglis, whom Mr.
Christian wooed without success, a Zeglis acquaintance reports. But "he's
not sure he's the right fit for them," the acquaintance says. "Computers are
not his thing." Mr. Zeglis, AT&T's second in command since fall 1997,
also is unsure about moving from suburban New Jersey, following a visit to
Houston in the past week.
Still, Mr. Zeglis seems unlikely to grab AT&T's brass ring any time soon.
He largely gave up his involvement in its big cable-industry bet when his
boss C. Michael Armstrong assigned him other duties in February. The
60-year-old Mr. Armstrong has said he intends to command the
telecommunications giant for at least another five years. AT&T declines to
comment about Mr. Zeglis's plans.
Mr. Brenneman, Continental's 37-year-old president, could be an inspired
choice for Compaq, one uninvolved recruiter says. He notes that the airline
executive lives in the Houston area, has strong turnaround credentials and
firmly grasps distribution. Compaq's PC woes are largely distribution
related. In the latest of several encounters, some board members had
breakfast with Mr. Brenneman two weeks ago.
Compaq and the Continental executive are now in negotiations over a
possible pay package. The airline paid its No. 2 executive nearly $1.6
million in salary and bonus last year. He also pocketed 550,000 options --
up from 90,000 the year before.
"It is not unusual for members of our executive team, including Greg, to be
contacted [by headhunters], especially as a result of our remarkable
turnaround," Continental spokesman Ned Walker says. |
