Word: ceos
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Dates: during 1990-1999
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When a company such as Reader's Digest performs so poorly for so long, shareholders usually revolt, forcing directors to make drastic changes. But in Digest's case, the board, which is supposed to be independent, is in the grip of the CEO. That would be George Grune, 68, who because of an unusual stock arrangement holds sway over enough voting shares to remove every Reader's Digest director. Grune's power source is his role as chairman of two charitable funds established by the company's childless founders, DeWitt and Lila Wallace, who died in 1981 and 1984, respectively...
Faced with declining dividends, the institutions wanted to sell their stock, but the CEO held the cards. The stock price, meanwhile, slid from its $56 high in 1992 to about half that in the summer of 1997. At the close of 1997, Grune agreed to let the institutions divest. Six of eight foundations dumped 11.8 million shares, worth more than a quarter-billion dollars. Critics like Paul Tierney, whose company Corporate Value Partners owns 1.5 million shares, think the deal is less than charitable. The institutions had to sell at 25% under the market price. They were "like lambs being...
...Grune gone. Says Lewis: "Grune is an ineffective manager, and I think the board of directors should expeditiously seek to replace him and/or to pursue the sale of the company." It's not quite the welcome back Grune anticipated when Digest lured him out of retirement to reclaim the CEO job last August. Grune declined requests for an interview...
Last April, four months before he resigned, CEO James Schadt unveiled a $400 million revitalization plan to push the company out of its morass and move it forward. But his approach, which upended the firm's age-old philosophy of dedicated product testing prior to direct-mail pitches, was roundly criticized by Wall Street as lacking coherence. In the week the plan was presented, the stock dropped 21%. Schadt's strategy was further hampered by the departure of more than two dozen senior executives...
Eric Hippeau, chair and CEO of Ziff-Davis Inc., also presented a keynote address in which he discussed issues concerning privacy on the Internet, self-regulation of the industry and the recent initial public offering of Ziff-Davis on the stock exchange...