seca group3 indispensable

7/29/2019 SecA Group3 Indispensable

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Presented by:Gagandeep Singh

Manu DhunnaPousali Chakrabarty

Rahul KhedkarShashank Badre

Sreejith


2/13

Astar Enterprises : Headquarters- New Jersey

Products-Home cleaning, laundry care,

personal hygiene and skin care Prominence- New England and Mid- Atlantic

states

Edward Bennett CEO, 64 Years of age

Tom Calloway- Non executive Chairman sincelast 5 years, CEO of Puritan Bancorp when heleft 5 years ago

Case Summary

18-03-2013 2Indian Institute of Management Raipur


3/13

Strong relationship between them Charismatic and entrepreneurial leader

Tussle between the two over the contentious issue of

succession planning Bennett insisted on staying focused in wake of new

global policy instead of succession

Ann Renaldi- Executive from Radiant Corporation,

Compensation Committees head Fred Henderson: Nominees- Executive from Luton

Industries, Nominating Committee

Case Summary



4/13

Reasons Violation of SEC and NYSE rules.

Upon the pressure created by the board hesuccumbed.

Nominees: Tom Terrell - Sales and Marketing

Marianne Klein - Executive Vice President of Corporateservices

Robert Glenn - Head of Consumer Products

Brian Jacobs - Vice President of Sales and Marketing

Case Summary



5/13

Constant aversion to the topic ofsuccession planning byEdward Bennett, Astars CEO.

Touted as a immediate possible successor by Bennett,Terrell was a reputed person but there were concerns abouthis strategic ability.

Robert Glenn, head of Astars Consumer Products Group,North America, had met with the board only for a fewpresentations

Brian Jacobs - Board hardly heard of him

Only Marianne Klein was familiar to the Board

Issues



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Hendersons argument about major lapse in the boardsfiduciary responsibilities as well as a possibleviolation ofSEC regulations and the rules governing listings on theNew York Stock Exchange

Astar was carrying a much higher level of debt

Heightened institutional investors earnings expectations

Several of Astars products were beginning to come underregulatory scrutinyin both the United States and Europe

Its Untamed hair colour, for instance, had provoked adebate about the accuracy of its labelling

Issues



7/13

Short Term Alternatives:

If CEO needs to be changed in some urgent situation what would be thecontingency plan for choosing next CEO? - Your three to five-year plan

for a successor becomes immediate and that person may not be ready,

Alternatives:

1. The infamous "name in the envelope" for the next CEO or emergencycandidate Choose Tom Terrell, as suggested by Bennett himself

2. Next CEO from outside the companywho had experience of leadingsimilar operations as that of Astar (including Global Exposure)

3. Name a consensus interim CEO in an emergency

Possible Alternatives



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Name In The Envelope:Strengths:Familiar withAstarswork culture and its various operationsFamiliar withAstarsmission and visionWeakness:Exclusion of potentially better onesIf any internal candidate is selected, it is likely that at least one of them will bedissatisfied with the results

Next CEO From Outside The Company:Strengths:Will bring in fresh perspective and have experience of handling similar operations as that ofAstarsWeakness:Non familiaritywith Business Strategy, Mission and Vision

Interim CEO: Executive Recruiters/ Large Consulting Firms/ Professional Interim

CEOStrengths:Expertise to lead the company until the next CEO is appointedGives the board time to target candidateswhose strengths align with the mission andstrategic plan.Weakness:Makes sense if the organization is on sound financial and operational footingInterim CEO believes they are also qualified to be CEO

Strength and Weakness

818-03-2013 Indian Institute of Management Raipur


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Short Term: Bringing in a professional interim CEO is the best meansof managing the transition period and setting up the company forlong-term success

A skilled interim preserves organizational stability The interim CEO provides insight into the qualifications needed in

candidates for the permanent position

An interim CEO gives the board the best opportunity to fullyevaluatepermanent candidates

Best Solution



10/13

Long Term Alternatives:In long term the board diligently figures out potential CEO successor

who aligns with Corporate Goals and Strategy

Alternatives:

1. Develop The Talent: Find each candidates areas of weakness and inexperience and create a training

and development plan for each

Give them overseas assignment , improve their technical or business skills underthe supervision of Mr. Bennett

2. Identify High-potential Talent: Find the people inside and outside the company who have leadership potential

and fitAstars CEO leadership profile

Possible Alternatives



11/13

Strength and Weakness Develop The Talent:

Strengths:Familiar withAstars work culture and its various operationsFamiliar withAstars mission and vision

Weakness:Difficulty in EvaluationProblem of failure of important live projectsTom Terrell is just 2 Yrs younger than Bennett

Identify High-potential Talent:Strengths:Will bring in fresh perspective and experience of handling similar operations as

that ofAstarsWeakness:Non acceptance by shareholdersNon familiarity with business strategy, Mission and VisionWrong candidate may cause blunder.



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Long Term: Based on Past data it is evident that most successfulcompanies chose internal CEO successors who had more than 10 yearsexperience at that company

Astar should give extensive training to all four candidates andchoose one among them after evaluating on each selection criteria

Best Solution



13/13

Davis, Sandra, Ph.D. and Nosal, David, Smart Planning For CEOSuccession, 2009, The Corporate Board, Vanguard Publications Inc., pp 17 to 21

http://www.russellreynolds.com/content/practical-guide-ceo-succession-planning

http://biz.thestar.com.my/news/story.asp?file=/2012/10/30/business/12242211&sec=business

http://www.businessweek.com/stories/2011-06-23/why-so-many-

companies-fail-at-ceo-succession-planningbusinessweek-business-news-stock-market-and-financial-advice

https://www.besmith.com/thought-leadership/white-papers/leadership-time-transition-top-10-benefits-interim-ceo

References


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