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ITT CFO cashes in chips in Starwood/ITT merger.
CFO Staff, CFO Magazine
April 1, 1998
The management picture is starting to shape up at Phoenix-based Starwood Hotels & Resorts Worldwide Inc., now that its merger with ITT Corp. is complete. Starwood managers are getting the jobs, while ITT executives are cashing in their chips. The exodus of ITT talent includes some of the best financial minds in the industry.
Just a few days after Starwood named its CFO, Ronald Brown, to the post of finance chief of the combined company, a spokesperson for ITT said its CFO, Ann Reese, would not be joining Starwood. That's despite an offer for 50,000 incentive options worth $2.5 million to stay put, say reports. She will get a hefty severance package, though, worth about three times her annual salary and bonus. That could be as high as $2.4 million, based on her compensation in 1996.
Gone, too, is Robert Bowman, president and COO of ITT, who played a major role in fending off Hilton Hotels Corp.'s hostile bid (see "The Fight for ITT," May 1997). Reports surfaced that Bowman was being considered for the top spot at Waste Management Inc., but the opportunity passed when WMI announced a merger with Waste USA. Bowman will get about $5 million in severance, according to reports.
The payouts are part of a golden parachute package put in place to fend off Hilton, despite promises ITT made in its proxy statements not to include such payments unless shareholders voted on them.
Starwood could ill afford to lose more high-level executives. "There is not tremendous depth of management at Starwood," says Paul Keung, VP of research at Deutsche Morgan Grenfell Inc., in New York.
But finance seems to be one area with plenty of depth. According to the Wall Street Journal, Starwood has no less than seven CFOs. A spokesperson for Starwood declined comment.
Times They Are a-Changin
Read all about it. John M. O'Brien is temporarily assuming the additional duties of CFO at The New York Times Co. The SVP for operations takes over for Diane P. Baker, who is leaving to spend more time with her family. She is the second high-ranking finance executive to depart the publishing company recently. Former VP of financial management Frank Gatti left in December to become CFO of Educational Testing Services. A search for a permanent successor to Baker is under way.
Just blowing off steam? Perhaps. But the event set the tone for the transformation of Northbrook, Ill.-based accounting firm Lipschultz, Levin & Gray LLC. Around the same time, four Lipschultz partners noticed that there wasn't enough communication in the conservative office. Says managing member Steven Siegel, "We were doing most things the industry way and it wasn't working." Siegel found that clients wanted a hard-working firm, but with an upbeat, zany attitude. And so the new Lipschultz was born. The firm cut office space in half, eliminated private offices, installed dart boards and a miniature golf course, and recently added a giant abacus.
The change, according to Siegel, reduced tension and eased communication in the office. It's also a hit with clients. Harry Drucker, president of Revere Corp., stuck with Lipschultz through the transition and admits, "It's more fun to deal with accountants who aren't stodgy."
Still, Siegel, an accountant at heart, hasn't lost sight of the bottom line. Since the transformation, "our income tripled, and the quality of our client base drastically improved," he clucks.