Last week, in considering tough decisions corporate boards make, I described the changes the board made in the CEO position at Russell Corporation during the time I served on its board. This week, I share changes made by the Motorola and Motorola Solutions boards during my time on their boards.
While serving on the Motorola board, several CEO changes occurred. When I joined the board in 1995, William J. Weisz served as chair, Gary L. Tooker was vice chair and CEO, and Christopher B. (Chris) Galvin (grandson of the founder) was president and COO. In 1997, Tooker was chair and Galvin was CEO. In 1999, Galvin was elevated to chair and continued as CEO. On September 19, 2003, the Motorola board announced it was seeking another CEO; following Galvin’s resignation on January 4, 2004, Edward J. Zander was recruited from outside Motorola and served as chair and CEO for four years. On January 1, 2008, Gregory Q. Brown was promoted from within and named CEO; Zander remained chair until May, at which time an independent director, David R. Dorman, was named Non-Executive Chairman of the Board. In March of 2008, the Motorola board announced plans to split the company. Sanjay Jha was recruited from Qualcomm and joined Motorola in August of 2008; he and Brown were named co-CEOs, with Jha being responsible for the mobile devices business and Brown being responsible for broadband mobility solutions. The split of the company into Motorola Solutions and Motorola Mobility occurred January 1, 2011, resulting in the board of directors being split; I joined the Motorola Solutions board, with Dorman serving as Non-Executive Chairman and Brown serving as CEO. At the annual shareholders meeting in 2011, Brown was named Chairman of the Board and CEO, a position he continues to hold.
Among the CEO changes at Motorola, the most contentious was the removal of Galvin. Following his grandfather and father in leading Motorola, it was extremely difficult for him. Quite naturally, given the family history, he took it personally.
In hindsight, I believe splitting the company was a wise move. Under Brown’s leadership, total shareholder return exceeded 500 percent. In the process, he streamlined the company and equipped it to be more facile and responsive to political, economic, and technological changes. My biggest regret is our decision to include Motorola’s patents and the Motorola brand in the spin, although Motorola Solutions can always use the brand and the Motorola batwing symbol. After the split, Motorola Mobility was acquired by Google; subsequently, Google sold the Motorola cell phone business, including the Motorola brand and all but 2,000 of Motorola’s patents to a Chinese consumer electronics firm, Lenovo.
In reflecting on cases in which CEO changes were made by board actions at other companies, in several cases it appears the boards should have acted sooner. However, absent the facts, such a conclusion is Monday morning quarterbacking.
Generally, it’s more difficult for a group to decide to change the CEO than it is for a single individual to make the decision. Each director thinks, “Am I the only one who believes a change is needed?” I recall being in a meeting of Motorola’s independent directors in Scottsdale, AZ, during which I asked, “Is Chris capable of providing the leadership needed for Motorola to succeed in the future?” Immediately, everyone agreed that a change was needed. Afterward, I wondered, if I hadn’t asked the question, how long would we have waited to take action?
When the individual making the decision has worked closely with the CEO for several years, the decision can be even more difficult to make and execute and can be easy to delay. The same is true for decisions the CEO makes to change the executive team. When I ask CEOs, “If you had it to do over, what would you do differently?” many say they would’ve made changes sooner. Regardless of who makes the decision, it’s not easy. However, it must be made.
Once an announcement is made of a CEO change, it’s important to secure a successor quickly. Although it’s quite common for universities to appoint interim CEOs (presidents or chancellors) when a vacancy occurs, it’s unusual for businesses, especially publicly traded companies, to appoint interim CEOs. Doing so creates too much uncertainty among executive team members, shareholders, customers, suppliers, investment bankers, and other stakeholders.
Because secrecy is a necessity in the process of identifying the successor, a small number of individuals are usually charged with doing so and doing it quickly. The longer the delay, the greater the likelihood of information leaks, which can change the makeup and size of the candidate pool.
Next Week: Corporate Boards—Part 4