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Presented by:Gagandeep Singh
Manu DhunnaPousali Chakrabarty
Rahul KhedkarShashank Badre
Sreejith
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Astar Enterprises : Headquarters- New Jersey
Products-Home cleaning, laundry care,
personal hygiene and skin care Prominence- New England and Mid- Atlantic
states
Edward Bennett CEO, 64 Years of age
Tom Calloway- Non executive Chairman sincelast 5 years, CEO of Puritan Bancorp when heleft 5 years ago
Case Summary
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Strong relationship between them Charismatic and entrepreneurial leader
Tussle between the two over the contentious issue of
succession planning Bennett insisted on staying focused in wake of new
global policy instead of succession
Ann Renaldi- Executive from Radiant Corporation,
Compensation Committees head Fred Henderson: Nominees- Executive from Luton
Industries, Nominating Committee
Case Summary
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Reasons Violation of SEC and NYSE rules.
Upon the pressure created by the board hesuccumbed.
Nominees: Tom Terrell - Sales and Marketing
Marianne Klein - Executive Vice President of Corporateservices
Robert Glenn - Head of Consumer Products
Brian Jacobs - Vice President of Sales and Marketing
Case Summary
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Constant aversion to the topic ofsuccession planning byEdward Bennett, Astars CEO.
Touted as a immediate possible successor by Bennett,Terrell was a reputed person but there were concerns abouthis strategic ability.
Robert Glenn, head of Astars Consumer Products Group,North America, had met with the board only for a fewpresentations
Brian Jacobs - Board hardly heard of him
Only Marianne Klein was familiar to the Board
Issues
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Hendersons argument about major lapse in the boardsfiduciary responsibilities as well as a possibleviolation ofSEC regulations and the rules governing listings on theNew York Stock Exchange
Astar was carrying a much higher level of debt
Heightened institutional investors earnings expectations
Several of Astars products were beginning to come underregulatory scrutinyin both the United States and Europe
Its Untamed hair colour, for instance, had provoked adebate about the accuracy of its labelling
Issues
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Short Term Alternatives:
If CEO needs to be changed in some urgent situation what would be thecontingency plan for choosing next CEO? - Your three to five-year plan
for a successor becomes immediate and that person may not be ready,
Alternatives:
1. The infamous "name in the envelope" for the next CEO or emergencycandidate Choose Tom Terrell, as suggested by Bennett himself
2. Next CEO from outside the companywho had experience of leadingsimilar operations as that of Astar (including Global Exposure)
3. Name a consensus interim CEO in an emergency
Possible Alternatives
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Name In The Envelope:Strengths:Familiar withAstarswork culture and its various operationsFamiliar withAstarsmission and visionWeakness:Exclusion of potentially better onesIf any internal candidate is selected, it is likely that at least one of them will bedissatisfied with the results
Next CEO From Outside The Company:Strengths:Will bring in fresh perspective and have experience of handling similar operations as that ofAstarsWeakness:Non familiaritywith Business Strategy, Mission and Vision
Interim CEO: Executive Recruiters/ Large Consulting Firms/ Professional Interim
CEOStrengths:Expertise to lead the company until the next CEO is appointedGives the board time to target candidateswhose strengths align with the mission andstrategic plan.Weakness:Makes sense if the organization is on sound financial and operational footingInterim CEO believes they are also qualified to be CEO
Strength and Weakness
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Short Term: Bringing in a professional interim CEO is the best meansof managing the transition period and setting up the company forlong-term success
A skilled interim preserves organizational stability The interim CEO provides insight into the qualifications needed in
candidates for the permanent position
An interim CEO gives the board the best opportunity to fullyevaluatepermanent candidates
Best Solution
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Long Term Alternatives:In long term the board diligently figures out potential CEO successor
who aligns with Corporate Goals and Strategy
Alternatives:
1. Develop The Talent: Find each candidates areas of weakness and inexperience and create a training
and development plan for each
Give them overseas assignment , improve their technical or business skills underthe supervision of Mr. Bennett
2. Identify High-potential Talent: Find the people inside and outside the company who have leadership potential
and fitAstars CEO leadership profile
Possible Alternatives
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Strength and Weakness Develop The Talent:
Strengths:Familiar withAstars work culture and its various operationsFamiliar withAstars mission and vision
Weakness:Difficulty in EvaluationProblem of failure of important live projectsTom Terrell is just 2 Yrs younger than Bennett
Identify High-potential Talent:Strengths:Will bring in fresh perspective and experience of handling similar operations as
that ofAstarsWeakness:Non acceptance by shareholdersNon familiarity with business strategy, Mission and VisionWrong candidate may cause blunder.
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Long Term: Based on Past data it is evident that most successfulcompanies chose internal CEO successors who had more than 10 yearsexperience at that company
Astar should give extensive training to all four candidates andchoose one among them after evaluating on each selection criteria
Best Solution
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Davis, Sandra, Ph.D. and Nosal, David, Smart Planning For CEOSuccession, 2009, The Corporate Board, Vanguard Publications Inc., pp 17 to 21
http://www.russellreynolds.com/content/practical-guide-ceo-succession-planning
http://biz.thestar.com.my/news/story.asp?file=/2012/10/30/business/12242211&sec=business
http://www.businessweek.com/stories/2011-06-23/why-so-many-
companies-fail-at-ceo-succession-planningbusinessweek-business-news-stock-market-and-financial-advice
https://www.besmith.com/thought-leadership/white-papers/leadership-time-transition-top-10-benefits-interim-ceo
References
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