Nearly four years ago, Mike Lehman, then CFO of Sun Microsystems, made the career move only a fortunate few can afford: he retired at age 51.
After 15 years at Sun, 10 of them as CFO, he walked away from the constant tumult of Silicon Valley to a presumable life of leisure. Sun, meanwhile, fell on hard times: its revenue and share price flattened, and by last October things turned so ugly that shareholders cast a nonbinding vote demanding that the company’s poison-pill defense be abandoned, a move that many analysts construed as a collective call for Sun to put itself on the block. The same day that vote was cast, CFO Steve McGowan announced plans to retire at the end of the current fiscal year, and in February of this year Sun announced that Lehman would return as the “new” CFO.
How was retirement?
My running joke was that the toughest decision I had to make each morning was whether to go golfing or mountain biking. But in truth, I sat on four corporate boards during the Sarbox transition, including my position as audit-committee head for Sun, so I was really very busy. It’s hard to say I was living up to anyone’s definition of retirement.
You remained very close to Sun during your retirement. Did they ask you to come back, or did you volunteer?
As soon as I heard about Steve’s plan to retire, I raised my hand and said, “I’m ready to come back. Put me in, coach.” During my retirement I had communicated to [senior management] that I was committed to Sun and prepared to step back in if the opportunity presented itself.
Steve McGowan announced his plan to retire in October 2005, and Sun announced you as the new CFO in February ’06. What took place during the intervening three-plus months?
It was in the company’s best interest to conduct a thorough internal and external search, and after an extensive review process they decided that I was the best candidate for the job.
You’re returning to Sun at a time when the company is in a far different position than it was when you left. What makes this move appealing for you?
Our acquisitions of StorageTek and SeeBeyond give us the best product lineup we’ve had in a long time, but there is work to be done to make sure we leverage those deals. And I plan to help us create a leaner, more effective business model. Over the next 90 days, Scott [Editor’s Note — McNealy resigned as CEO after this article went to press, but remains with Sun as Chairman of the Board], president and COO Jonathan [Schwartz], and I will look at everything we’re doing across the company in great detail to really examine how and where we’re doing business. Another key for me will be to improve our relations with investors. Clearly, in the last few years the company hasn’t been the darling of Wall Street, and I want to get out and talk to people to improve those relationships.
What will you tell them?
I’ve already spread the word that we’re going to come out in July and not give guidance per se, but talk more about our business model going forward, including key aspects such as revenue and our expected growth rate versus the industry, growth margin, and operating margin targets, to give them some idea of how to measure us over the next few quarters. When you’re willing to talk more about where you are going, it opens doors.
Will this no-stone-unturned project lead to substantial changes?
Here’s an example of how closely we’ll look at everything: one of the first things I was presented with when I came back was the renewal of a lease in San Diego. Rather than talk about whether we got a good lease rate and the right renewal terms, I wanted to know who the people down there are, and what they do. What projects are they working on? Are they short-term in nature or long-term in nature? Is San Diego a place we want to recruit going forward? I want to know the answers to all those questions before we talk about renewing the lease. So that’s just a little flavor of what we mean by looking at everything.
Did your four years away from the CFO’s office affect how you tackle things now?
My basic philosophy is still the same — that I need to hire great people and give them the freedom to do their jobs; to support, coach, and develop them. But my time away and my experience as a board member have given me a sense of urgency. I really want to make something happen fast. I’m older; I’m probably a little less patient. I have the freedom to challenge and question everything, and that’s a good position to be in.
It’s been suggested that you drove a hard bargain when it came to compensation this time.
Anyone can go back and look at what my salary was four years ago. If you add nominal increases, I’m in right about the same spot, so I don’t think I drove a particularly hard bargain. I was just ready to come back in and get to work.
At any price, it’s got to be hard to give up golf in favor of logging some ungodly number of hours at the office. Did you have any trepidation about that?
Well, I wouldn’t be human if I didn’t. It’s clear that waking up in the morning and deciding whether to go golfing or biking is a pretty interesting alternative to getting up and going to the office. But I believe that I’m the best person to come in and make the most of our current opportunities, and that’s what I want to do. The next 90 to 100 days are very important. We’ve got our priorities lined up, and it’s by being here full-time and engaged in day-to-day discussions and decisions that I can best help us deliver. — Interview by Scott Leibs