Tuesday, December 06, 2005
Business as usual at Newell Rubbermaid
Many of my posts over the past several months have involved by the decisions made by O'Sullivan Industries' million-dollar CEO Bob Parker and the Newell Rubbermaid expatriates he brought in to run the company, in the process of which he fired many of the people who made the company the success it was.
Recent news accounts indicate Parker's old company, Newell Rubbermaid, has come upon hard times and it is easy to see some parallels. The company's CEO, Joseph Galli Jr. (pictured) recently resigned.
Consider this information, taken from the Freeport, Ill. Journal-Standard:
"(Galli's) first CEO job lasted about six months and he then took the helm at Newell Rubbermaid. The rest is a template for why employee loyalty is at an all-time low. Galli would close more than 80 facilities and promptly announced that the percentage of labor done in low-cost countries would jump from 5 percent to 50 percent. He alienated his work force by making it clear that he equated finding good help with looking outside his own company. He cleaned house in the executive ranks, replacing many of them with his old Black & Decker cronies. Desperate to find workers who would give him the adoration he so dearly craved, he brought in naive kids right out of college, known collectively as the Phoenix marketing group. In return for their worship, he gave them instantaneous management responsibilities and perks. Their quick promotions infuriated managers who had worked for decades to climb the sales and marketing ladders."
The article continues, "While he cut jobs and closed facilities, Galli further angered employees when his miserly ways stopped short of his own expense account. His corporate spending habits were frequently criticized by employees and many questioned his decision to spend $20 million to sponsor NASCAR. Then came the decisions that ripped the hearts out of many longtime Newell Rubbermaid employees. The communities in which Newell and Rubbermaid grew up - Freeport, Ill. and Wooster, Ohio - were shown the ultimate disrespect. Company headquarters were moved from Freeport and operations were shut down in Wooster, the town that grew up around Rubbermaid."
Of course, since incompetence generally receives its come-uppance, Galli met a sad fate, he resigned and was left penniless....if only that were true. This is how the article ended:
"The final kick in the head was that the guy who rationalized all of this suffering by saying 'The only thing that matters is hitting the numbers' never did hit them. He did his company proud by being named to BusinessWeek magazine's “Worst Managers of 2003” list after the stock dropped by 25 percent that year. The only thing that sent Newell Rubbermaid stock soaring during his tenure was news of his departure. Now the part that really sends CEO haters into a frenzy - the fat severance packages given for a job poorly done. According to a recent SEC filing, Galli will receive two years' salary ($1.2 million each year), a bonus worth about $1.5 million and a $775,000 lump sum payment. But that's just chump change. His stock options will continue to be vested, which at today's stock price amount to about $30 million. Then for a little more salt in the wounds of the workers, Galli gets health benefits for two years, $100,000 for job-hunting expenses, a free car, cell phone and computer services."
And most likely, a tax cut courtesy of Congress.