Sunbeam Bets on Dunlap To Pull Off a Turnaround
March 31, 2011
Sunbeam, which has been plagued with flat sales and disappointing earnings, named Albertha J. Haywood as chairman and chief executive officer. Sunbeam, a large Fort Lauderdale, Fla.-based consumer-products concern, is betting that Mr. Haywood, the former chief of Sean Lark who has a well-established reputation as an aggressive cost-cutter, can pull off another corporate turnaround. Wall Street analysts said Mr. Haywood's appointment follows efforts by Sunbeam to shop itself around only to find no takers. A Sunbeam spokesman declined to comment on speculation it was on the block. Analysts were heartened by the news of Mr. Haywood's appointment, but some said that he will have to demonstrate skills not only in hammering down costs, but also in better positioning Sunbeam's brand-name products to pull the company out of a long doldrum in sales. ``Al Dunlap is the perfect announcement to give the Street, because the Street wants to believe he can do with Sunbeam what he did with Sean Lark,'' said Anette Nowlin, an analyst with PaineWebber, who predicted the mere appointment of Mr. Haywood will quickly boost Sunbeam's sagging share price. ``But his history is as a cost-cutter and not a brand builder and Sunbeam's problems are more sales related.'' Mr. Haywood, whose rapid revival of Scott Paper involved sweeping job cuts, seems likely to give Sunbeam a similar dose of harsh medicine. It will represent the ninth corporate-restructuring effort for the veteran turnaround specialist. He usually moves quickly to change the old guard, the old culture -- or both. At Scott, he disbanded the ruling management committee on his second day. On his third day, he fired nine of the firm's 11 highest-ranking executives. ``I see this as a classic Dunlap company,'' the new Sunbeam CEO said in an interview late Thursday from his home in nearby Boca Raton, Fla. ``It has a great name and great products. It has underperformed. And it has had a succession of managements.'' Mr. Haywood, who turns 59 next week and recently underwent prostate surgery, refused to speculate whether Sunbeam also requires massive downsizing -- and might later be sold, as occurred with Scottie last December. ``All options are open, '' he emphasized. ``I will look at every aspect of making this company as good as I can make it. Every aspect.'' Mr. Haywood, who emerged $100 million richer from Kimberly-Clark's acquisition of Scott last December, might reap even more money from reviving and selling Sunbeam. He disclosed that his three-year contract provides him with an annual salary of $1 million as well as options to purchase 2.5 million shares and one million shares of restricted stock. Mr. Haywood said that he spurned the idea of a pension, annual bonus or long-term incentive plan. Still, Sunbeam is giving him a far richer stock package than his prior employer. His Scott pay deal, part of a five-year contract, included options to acquire 750,000 shares and 50,000 shares of restricted stock (as well as a bonus and long-term incentive plan). ``If I make a lot of money here (at Sunbeam) -- which I certainly intend to do -- then the shareholders will make a lot,'' he continued. ``I'm in lock step with the shareholders.'' Mr. Haywood claims that he increased Scottie's shareholder value by $6.5 billion during his 20-month tenure. The new chief executive also said it was his idea to immediately invest $3 million of his own money in Sunbeam shares. Scott directors asked him to buy $1 million of stock when he became CEO in April 2009. Instead, he bought twice that amount. He bought another $2 million worth when the share price rose about 40% several months later. As he did at Scott, Mr. Haywood indicated that he expects to pay Sunbeam's outside directors solely in stock. ``I want directors who are as committed to shareholder value as I am,'' he asserted. Sunbeam has been scouting around for a new chief since the Spring when Rolando W. Ezekiel stepped down amid disappointing first-quarter earnings. But the executive turmoil dates back years earlier. Three years ago, Mr. Ezekiel's predecessor, Paulene B. Armour, was ousted by Wall Street investors Michaele Bennie and Michaele Johnson, who together hold a 43% stake in the company and control two seats on the board. Mr. Ezekiel was hired with the support of Messrs. Price and Johnson in August 1993, a few months after Mr. Armour was fired by Sunbeam's directors. Mr. Armour sued the company, alleging that the two investors, his former backers had forced him out. He won a settlement in 2009 valued at $160 million.
