Transitions / The season of change

Finding new leaders, making the pick, moving on


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Just who's in charge here, anyway?

CEOs come and CEOs go -- it's a fact of corporate life -- but Pittsburgh has seen more than its natural share of leadership departures over the last year-plus at some of the region's most visible companies. Some departures occurred by choice, some by outright firing, some took place after a period of sustained shareholder pressure, but add them up and there's no year like it in recent memory.

• PNC Financial Services Group's longtime chief executive, Jim Rohr, stepped down in April, announcing in February that, at age 64, the time had come for new leadership at Pittsburgh's largest bank.

• Former Highmark CEO Ken Melani was fired in April 2012, after being charged following a domestic altercation.

• Chesapeake Energy CEO Aubrey McClendon left his company in April, after standoffs with shareholders and his new board of directors. Chesapeake is based in Oklahoma but has significant natural gas drilling operations here.

• Michael Baker, one of the region's top engineering firms, found itself searching for a successor to president and CEO Bradley L. Mallory, who resigned Dec. 13 at the behest of his board.

• A year ago, after announcing that he would retire from his post as CEO of Bayer Corp. USA, Greg Babe took the same position with the Downtown-based Orbital Engineering.

• Nick Trombetta, former CEO of the Pennsylvania Cyber Charter School, resigned June 30, amid IRS and FBI investigations into the school's finances.

• Pittsburgh Post-Gazette President Christopher Chamberlain departed in July to become the CEO of Novum Pharmaceutical Research Services, an East Liberty-based medical research company.

• John S. Stanik, chairman, president and CEO of Calgon Carbon, retired from the Robinson environmental services firm last year.

• The wave of change did not bypass the public sector and its most notable chief executive officers -- Port Authority of Allegheny County CEO Steve Bland was fired this year by his board (and, by extension, was fired by Allegheny County Executive Rich Fitzgerald), and Allegheny County Airport Authority chief executive Bradley Penrod was demoted, as the airport searches for a new CEO.

Also, Pennsylvania Liquor Control Board CEO Joe Conti retired in February, though he will continue to do consulting work for the agency. Meanwhile, Pennsylvania Turnpike CEO Roger Nutt resigned last year due to health problems.

• The nonprofit sector was hit, too. Andre Kimo Stone Guess, CEO of the August Wilson Center for African American Culture, and Jermaine Husser, chief executive officer of the Greater Pittsburgh Community Food Bank, both stepped down last year after short tenures.

• And one of the shortest tenures in CEO history occurred last year when Westinghouse Electric Corp. lost its new president and CEO. Jim Ferland resigned on April 3, 2012, after just two days on the job, to take a job with Babcock and Wilcox.

Did we miss anybody?

One of the reasons so many CEOs have departed in the last 16 months is that Pittsburgh was due for a correction.

"I think that we've been kind of unusual historically in how long the tenure has been for some of our private-sector CEOs," said Dennis Yablonsky, CEO of the Allegheny Conference on Community Development.

He compared the Pittsburgh corporate community's approach to CEOs to the Rooney family's approach to hiring head coaches -- if you make the right hire in the first place, why change?

"There's a bit of a Pittsburgh cultural thing at play here," he said. "You stick with what you know, you take a long-term view ... I'm the sixth CEO of the Allegheny Conference in 69 years.

In other words, one CEO every 11 or so years.

Nationally, the average CEO tenure is 8.4 years, according to the 2012 edition of "CEO Succession Practices," a publication of The Conference Board, a business research outfit. Challenger, Gray & Christmas, a global outplacement firm, put the average tenure at 8.1 years.

A decade ago, the average CEO tenure was 10 years.

So the pace of change, it seems, is quickening.

If what we saw in Pittsburgh seemed an anomaly, nationally it represented something of a trend -- 2012 saw more CEO turnover than 2011, according to Challenger, Gray & Christmas.

In 2012, there were 1,214 CEO departures nationally, a 3 percent increase over 2011.

The health care sector experienced the highest CEO turnover in 2012, with 230 changes, up 23 percent from 187 in 2011, according to Challenger. The government and nonprofit sector had the second highest turnover rate in 2012 with 179 resignations, retirements, firings or departures, up 17.7 percent from the 152 CEO departures changes in 2011.

The churn "could be indicative of a turning point in the recovery," John A. Challenger, CEO of Challenger, Gray & Christmas, said in a statement.

"We may see heavy turnover continue into 2013 as the economy continues to improve and companies shake up management to reflect a change in strategy from one centered around maintaining stability to one focused on growth and expansion." (In January, however, the pace slowed a bit -- 113 CEO changes, down 10 percent from January 2012 when 126 CEOs departed.)

"Positions of leadership today are more challenging maybe than in recent history," said Gregory Jordan, managing partner (essentially, the CEO) of Downtown's Reed Smith. "The more challenging economic times make the expectations harder to meet."

Mr. Jordan also noted that while the number of departed chief executives may have seemed higher the usual, it was the high profile nature of the departures -- particularly Mr. Rohr and Dr. Melani, who headed two of Pittsburgh's flagship companies -- that grabbed his attention.

"There are CEOs," he said, "and then there are CEOs."

Like Mr. Yablonsky, Mr. Jordan believes Pittsburgh's DNA makes it resistant to knee-jerk reaction.

He pointed to the seamless PNC successions -- Thomas H. O'Brien for 15 years, to Jim Rohr for 13 years, with William S. Demchak next in line for the baton -- as a prime example of that resistance. Even during tough times -- such as early in Mr. Rohr's tenure, when stock prices plummeted and the bank was being watched by regulators because of some questionable accounting maneuvers -- there was no rush to change.

Which makes the recent rush of change all the more jarring.

"I do think there's a heightened value in Pittsburgh on stability and planning," Mr. Jordan said.

intheleadstories

-- Bill Toland: btoland@post-gazette.com or 412-263-2625


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