Successor ready at McCormick

Wilson to replace Lawless at No. 1 spice maker

October 02, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN REPORTER

His replacement is groomed and ready. His company, analysts say, is in good shape. After 30 years with McCormick & Co. Inc. and a decade as its chief executive, Robert J. Lawless says it's time to retire from the spice maker.

The Baltimore County company announced yesterday that President Alan D. Wilson would keep that position and step into the CEO role Jan. 1. Lawless will remain as non-executive chairman.

"It was the right time," said Lawless, 60. "I did what I thought I could do."

The company has worked on its succession plan for the past five years, replacing top executives by promoting employees up the leadership ranks, he said. Wilson, 49, succeeded him as president in January.

Lawless - who grew up in Ontario, the son of an electric company foreman - said the move doesn't mean he's exiting the corporate world. But he's not ready to share his plans.

"I'm not going to retire, let's put it that way," said Lawless, whose compensation was $7.8 million last year.

He said Wilson's varied experience with the company has prepared the Baltimore County resident well for the top spot. In 14 years with McCormick, Wilson oversaw the company's packaging division, which has since been sold off; its Canadian operations, and its U.S. consumer foods and supply chain.

The world's largest spice maker said Wilson has been "instrumental" in executing a strategy to save $50 million a year by restructuring, including a plan to cut as many as 1,000 jobs from its global work force. The company, now about halfway through that effort, announced the plan in 2005 when profits were flat.

McCormick currently employs 7,500 worldwide, a reduction of 500. Most of the cuts came in California.

In Maryland, where McCormick has 2,200 in positions ranging from manufacturing to research and development, the work force has been slimmed by 100 jobs. The Sparks headquarters, which employs 167, is down only slightly.

For McCormick, the short-term challenge is to increase profits at a time when its costs for ingredients - from flour to pepper - have rapidly risen.

Wilson, who helped the company chart its current course, said he intends to continue following through on the strategy to grow through innovation and acquisition, expand its markets internationally and manage costs.

"As every business does, we've got challenges around the world," Wilson said. "But I also think we have big opportunities."

Mitch Pinheiro, a senior food analyst at Janney Montgomery Scott, said the choice to promote Wilson makes sense and is not a surprise, after the partial handover of power earlier this year.

"I think Alan's going to make a fine CEO," said Pinheiro, who does not own stock in the company. "It maintains continuity."

A South Carolina native, Wilson graduated from the University of Tennessee in 1980 with a degree in communications. After four years in the Army as a nuclear weapons officer, he joined Procter & Gamble - later moving to Baltimore when the company bought local cosmetics maker Noxell Corp. in 1989. He was senior purchasing manager for Procter & Gamble's cosmetics division when he moved to McCormick in 1993.

Lawless, who started his career at 3M Canada but spent most of it with McCormick, is well regarded inside and outside the company, Pinheiro said. Loyola College named him Business Leader of the Year in 2001, and the state Chamber of Commerce inducted him into its Maryland Business Hall of Fame in 2004.

Donald C. Fry, president of the Greater Baltimore Committee, praised Lawless as always willing to help. He serves on a variety of boards.

"If you needed something or had an issue, he would find the time to be accessible to you or would make sure the appropriate individual at McCormick was available," Fry said.

Lawless, a former hockey player, brought that rink-sharpened competitive drive to the boardroom. "He wants to win, and so you never count him out," Pinheiro said.

In 1997 - Lawless' first year as CEO and second as president - the company came out on top in a pitched battle for market share with an Australian challenger.

Burns, Philp & Co. conceded defeat entirely, announcing that it would sell its spice division. (McCormick fought so aggressively for grocer contracts that the Federal Trade Commission intervened, but after an investigation did not fine the company.)

Afterward, it embarked on a series of acquisitions. In 2000, it bought Ducros, Europe's leading spice supplier. In 2003, it purchased British condiment maker Uniqsauces and Zatarain's, Louisiana-style food mixes, spices and flavorings.

In 2004, it bought Dutch spice and herb maker C.M. van Sillevoldt BV. Last year, it acquired Epicurean International, which imports the Thai Kitchen and Simply Asia brands of noodle and soup bowls, meal kits, coconut milk and sauces and pastes.

For McCormick, quick-and-easy mixes and products are a means of reaching busy consumers who don't have time for the complex meals of days past - and don't need a full spice rack.

"They've done well," said R. Bentley Offutt, an analyst at Offutt Securities, an institutional research brokerage in Cockeysville. He does not own McCormick stock. "It's a tough business, and the company continues to grow market share."

Sales in its last fiscal year were up 50 percent over Lawless' first year as CEO. Income was double. The company's stock price, which closed down 4 cents at $35.93 yesterday, has tripled.

But share prices have fallen about 5 percent in the past 12 months.

Pinheiro said investors are reacting to the cost pressures. Profits shrank last year as the company had to take millions in one-time charges related to its restructuring. It also couldn't immediately pass increased commodity costs along to industrial customers such as food manufacturers.

jamie.smith.hopkins@baltsun.com

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