From the WSJ - some new CEO prospects, among them an 'airline guy', and John Zeglis from T. I've heard of Zeglis, has a pretty good operations rep. Too bad Palmisano of IBM is not interested, but then he already runs a business pretty close to the size of CPQ, and also has a shot at the CEO slot in a couple of years.
John
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.
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