NEW YORK — Some shoes are hard to fill, especially when they are cemented with impediments.
It’s been seven months since Paul Charron announced he would step down as chairman and chief executive officer of Liz Claiborne Inc. come Dec. 31, which means the board has four months left to find a replacement.
Industry insiders had predicted a successor would be selected by the end of August. They now speculate the lengthy search — with few industry observers aware of any potential successors’ names — may bode well for choosing an internal candidate such as Claiborne president Trudy Sullivan.
Conflicts of interest — from all directions — are a likely reason for the slow search. Retail headhunters point to a trio of limitations: not being able to pull from retailers for fear of losing key accounts in a consolidated world, non-compete contracts within the apparel industry and the list of clients from which search firm Spencer Stuart cannot poach.
Large manufacturing firms looking for senior management should eliminate retail executives from their wish list out of fear of losing business with major retailers, particularly Federated Department Stores, according to industry executives.
“Retailers are trying to protect their downside,” said Bobbie Lenga-Gutman, who heads the retail practice at Russell Reynolds Associates in Chicago. “Hiring from a retailer would put the relationship at risk. It would just cause too much trouble. It all comes back to the issue that there is simply a finite level of available talent out there.”
Non-compete clauses that prohibit executives from moving within the industry are not new, but they have become more popular and more comprehensive in the last decade, according to Kirk Palmer of Kirk Palmer Associates, a boutique hiring firm based in New York. Earlier this summer, reports were circulating about failed negotiations to hire Patrick Bousquet-Chavanne, a group president at Estée Lauder Cos., who is said to have had such a non-compete contract.
But the bigger problem, Palmer said, is with large, Chicago-based Spencer Stuart’s off-limits list, which reportedly includes Polo Ralph Lauren Corp. as one of many clients from which it cannot hire. That would have eliminated one of the industry’s most sought-after executives, Polo chief operating officer Roger Farah, from consideration.
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“Larger companies are driven by top-line growth, and that means they have a large list of clients and a fairly extensive off-limits list,” Palmer said.
Another headhunter, who requested anonymity, added of Spencer Stuart, “They have a laundry list of hands-off policies.”
With so many prime candidates crossed off the list, Claiborne could be forced to look in some unusual places.
“Liz Claiborne is not the only company that sells to Kohl’s. A lot of people make products that go into a retail store: refrigerators, toasters, cosmetics,” the same headhunter said. “There are good people who sit in corporations in other industries — in consumer products, the cosmetics industry, technology, finance banking, automobile industry.”
Even then, there may not be many choices for such a significant position as the one Charron has held for more than a decade. He joined Claiborne in 1994, has served as ceo since 1995 and took on the added post of chairman in 1996. The Harvard graduate, who had previously served as a group vice president and executive vice president at VF Corp. and as an executive at Procter & Gamble, has more than doubled Claiborne from a $2 billion firm with five brands to a $4.85 billion one with a portfolio of 41 labels.
“You have to look in different buckets, within your company, within the industry and outside the industry,” said Lenga-Gutman. “It’s not so easy to pull great talent. This industry talent pool is getting to be more and more finite. I don’t think that as an industry, we are training people appropriately anymore. Some have left the industry. Some are not interested in those roles anymore. There is great talent that have phenomenal jobs right now that they don’t want to leave. Replacing icons is a tall order because they are tough to duplicate.”
After eliminating so many contenders, an option at hand can seem more credible. A long search, which appears to have included several external strikeouts, may make an internal candidate more attractive, headhunters speculate.
“Sometimes it seems that if you have gone down a few paths, you will decide your internal candidate looks more attractive,” said Melanie Kusin, vice chairman at executive recruiting agency Heidrick & Struggles Inc. “Often the process is a benchmark for an internal candidate. Sometimes it takes going through the exercise of looking through people to learn that.”
Palmer, whose firm handled Liz Claiborne’s hiring of Trudy Sullivan five years ago, said, “I would hope this bodes well for Trudy’s candidacy. Sometimes when a search goes on for six or seven months, it allows the board to have a broader view and a better appreciation of a candidate.”
For her part, Sullivan said, “I have no idea — this is at the board level. The board has always said they are looking at internal and external candidates.”
Sullivan was named president of Claiborne when Charron announced his retirement in January, and since 2005, has had oversight responsibility for all of the company’s brands. She joined Claiborne in 2001 as group president of Liz Claiborne Casual, Collection and Liz Claiborne Woman, and the next year was named an executive vice president with additional responsibility for accessories, cosmetics, retail, outlet and licensing.
The board may have changed its candidate description during the process, some speculate. Neither the company nor Spencer Stuart would comment on any updates in the search.
“I never think it’s a dearth of talent issue,” Kusin said. “Perhaps it’s a poorly framed strategy of what a board is pursuing. Sometimes boards don’t know what they are looking for. That is why you are seeing a lot of long searches — boards don’t know what they want. From the outside, we don’t know what those boards want. But Liz has a gold-studded board, and I would expect they aren’t going to make a mistake.”
The board includes Daniel Carp, retired chairman and ceo of Eastman Kodak Co.; Mary Kay Haben, a senior vice president at Kraft Foods Inc., and Arthur Martinez, retired chairman, president and ceo of Sears Roebuck & Co.
Meanwhile, Liz Claiborne’s search could have implications for its competitor, Jones Apparel Group. The manufacturing giant just took itself off the market after not finding a buyer to match its asking price, and some industry insiders are questioning Peter Boneparth’s future with the firm.
But Catherine Sadler, the president of the New York-based marketing agency Catherine Sadler Group, believes the long Liz search could make the Jones board think twice about getting rid of Boneparth.
“If they do decide to replace Peter, it’s going to be very difficult to find someone when there is a similar search out with similar specs,” Sadler said. “They may not want to render the business even more vulnerable.”