In his role as lead director of the Avon board — and quite appropriatley, in my view — Fred Hassan has come under very-significant fire, for setting up an arguably-flawed succession plan at Avon, now that CEO Jung is on her way out (per a December board decision).
The crux of Fred’s problem (according to CEOs who spoke on the record to The Wall Street Jounral [$$$], here) appears to be too much loyalty to a woman executive he regards as a peer (hmmmm. . . think Carrie Cox, here), allowing her to essentially set the terms of her own departure. This will make it much tougher (the argument runs) to get a truly first rate new CEO — as many of the best won’t want to have to assauge the feelings (or worse, kow-tow to) the now ex-CEO — sitting in a non-executive chairman’s role — for almost two years.
In short, Fred has been too protective of his fellow-executives’ predilections, and too-quick to slash the jobs of his subordinates — by the high-multiple tens of thousands, over the last decade [at AHP, Pharmacia, then Schering-Plough].
If nothing else, it is extremely unusual to see other Fortune 200 CEOs willing to go on the record, and in writing, to criticize lead director Hassan’s strategy — all at a company in which only a few of them still hold shares. One could more readily understand it — as simple sour grapes — if (for example) it were Mr. Buffett criticizing moves that hurt one of his investments. But this is different, and deadly, to Fred Hassan’s reputation among his peers — in my eye. Take a look, but do go read it all:
. . . .Former Avon CEO James Preston, once one of Ms. Jung’s closest mentors, took the unusual step of writing a letter to the board two days after the shake-up. He criticized Ms. Jung’s leadership, stressed that departing CEOs should step aside and called on the board to replace her with someone with deep experience in the direct-selling world. . . “I have long held the belief that once a CEO leaves that position, he or she should make a ‘clean break’ and not question or second-guess the actions of his successor. . . .”
Fred Hassan. . . defended having Ms. Jung remain executive chairman for two years after the new CEO arrives. “Given the specific nature of the company and the specific nature of the board, we have very strong confidence that we can make this transition work. . . .”
David Mitchell, Avon’s chief executive from 1975 to 1983 and a current shareholder, said in an interview he was particularly perturbed over Ms. Jung’s desire to stay for so long. Mr. Mitchell remained on Avon’s board for a short time after leaving his post in 1983. He said he has met Ms. Jung only a handful of times.
He called the split CEO-chairman structure “a stupid arrangement” that will make the board’s search for a quality successor nearly impossible. . . .
Ms. Jung doesn’t plan to cede much power.
“I am not going anywhere,” Ms. Jung wrote in an internal memo, reviewed by The Wall Street Journal, last week to all U.S. employees and global managers. “I will remain very close to the business, defining the company’s strategy and brand positioning.”
As executive chairman, she will earn a $1 million salary, a maximum annual bonus of $1 million and long-term incentives valued at as much as $4 million a year. . . .
Maybe the worm has finally turned — and fellow CEOs are seeing Fred Hassan for who he is — someone who appears to manage “up, and sideways” very well (telling everyone at his level, or above, exactly what they want to hear — but doing none of it) — while entirely failing to manage “down“.
Time will tell.