Dow Jones article on 'CEO searching'...
Regards,
John
Young Web Cos Sap CEO Talent As
Compaq, H-P Search
By CHRISTOPHER GRIMES
Dow Jones Newswires
NEW YORK -- Both Hewlett-Packard Co. (HWP) and Compaq
Computer Corp. (CPQ) want a new leader who can help them catch
up with the Internet Age.
But the Internet Age could be making it more difficult for these two
computing giants to find new leaders.
In an odd twist of timing, two of the country's three largest computer
companies are looking for new chief executives right now.
Recruiting experts say there are no more than 20 people who are up
to the job of running either H-P, No. 14 on this year's Fortune 500
list, or Compaq, ranked No. 28.
And the Internet boom, which has made many executives very rich in
a very short period of time, is making that list of potential candidates
even smaller.
"There are so many pre-IPO e-commerce companies doing CEO
searches" that the talent pool in technology is drying up, said Jeff
Christian, chief executive of recruitment firm Christian & Timbers in
Cleveland. "There are not a lot of spaces left in the technology
history book, and now (with the Internet) there is an opportunity to
create a new legend."
Compaq or H-P could always widen the pool by conducting their
searches outside the high-tech industry. That move is still seen as
unusual for computer companies, however, despite the success of
non-techie Louis V. Gerstner, chief executive of International
Business Machines Corp. (IBM), headhunters said.
The 'More Fun' Factor
But could the allure of running, say, the next eBay Inc. (EBAY) really
outweigh that of being Big Cheese at Compaq?
"Ten years ago, the answer would have been no," said Whitney
Bower, a venture capitalist at Geocapital Partners.
Today, however, the young Web company offers a potential CEO
"the ability to realize extraordinary wealth in a rapid period of time,
particularly in Internet time."
Just as important, he says: "It's probably a hell of a lot more fun."
Gary Eichhorn, president and chief executive of Open Market Inc.
(OMKT), endorses the "more fun" view.
Before joining the young e-commerce software company in 1995,
Eichhorn was climbing the ladder at Hewlett-Packard. He led H-P's
workstation unit and was general manager of its medical products
group, overseeing 5,000 workers and 900 products.
While he says he enjoyed working at H-P, Eichhorn was drawn to
Open Market's start-up vibe and the opportunity to stay on the East
Coast, where his family was comfortable.
"Certainly there's an excitement about building your own company,"
Eichhorn said. "One of the things that attracted me to Open Market
was having pride in looking back and knowing that everything the
company became, you had a hand in."
And he agreed that there's a shortage of experienced technology
executives right now.
"Certainly there are fewer qualified candidates out there than a few
years ago because of all the new companies," he said. "It's not only
the compensation," that draws them to young companies, "but the
ability for them to feel they have an impact and are making a
difference."
Certainly, though, the compensation helps. At Hewlett and at
Compaq, salaries and bonuses for the big bosses were higher than
those paid by many Internet companies last year. But stock option
awards at the Web companies sometimes bridged the gap.
At H-P, Chief Executive Lewis Platt was paid $1.9 million in salary
and bonus in 1998, but his options awards were crimped because
the company didn't meet performance requirements. Compaq's
ex-CEO Eckhard Pfeiffer was paid $4.5 million in salary and bonus
in 1998. The executive, dismissed by the company's board in
mid-April, held roughly $340 million worth of options as of March.
In contrast, Yahoo! Inc's (YHOO) president and chief executive,
Timothy Koogle, was paid $195,000 in salary in 1998, but was
awarded options with a potential value of nearly $87 million. He also
held about $544 million in various options.
Acres Of Bricks Still A Draw For Some
Jon Carter, an executive recruiter at Egon Zhender in Silicon Valley,
agrees that the Internet has changed the technology recruiting
landscape.
"What the Internet phenomenon has done is show a different path,
with equal if not more financial rewards" than offered by older
technology companies. Such positions also offer the opportunity "to
escape the politics, the heavy trappings" of a big corporate job.
But he disagrees that future eBays and Amazon.coms are siphoning
off the potential new leaders at Compaq or Hewlett-Packard.
"Not all of them have their eyes on a start- up," Carter said of the
potential candidates.
The few people with the ability - to say nothing of the ego - to run H-P
or Compaq may not neccessarily be willing to give up the prestige of
lording over "acres of bricks and mortar" or the large staff, the jets,
the authority.
"The people who are capable of the scale and scope of (running
H-P or Compaq) are still seduced by that," he said.
Neither Seen Straying Far From Tech Industry
Of course, there's a case to be made that neither Compaq nor
Hewlett-Packard needs to select a chief executive from inside the
computer industry. That scenario might seem radical, since neither
company has hired a CEO from outside. But IBM's hiring of Gerstner
from R.J. Reynolds in 1993 has made the concept seem a little less
heretical.
Christian, the executive recruiter, said it's important for Compaq to
look within the high-tech industry. But the company should also "look
in consumer products with a technology component," like Eastman
Kodak Co. (EK) or Gillette Co (G).
"They need someone who understands technology, but also
understands pricing and branding," he said.
Both Compaq and Hewlett have stumbled in the last year or so,
despite remarkable growth through much of the decade. So the
main priority of both of them should be to bring in someone from
inside the tech industry, but not from within their own companies,
said Jack McNeal, a recruiter at Probus Executive Search in Los
Altos, Calif.
"I think they both need some fresh air," McNeal said.
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