Mmm, Mmm, Not So Good
Last week was a roller-coaster ride for Campbell Soup CEO Denise Morrison. On Thursday, she was named one of the 10 most reputable CEOs in the world – the only woman on the list. On Friday, the company announced that Morrison had chosen to “retire” and was being replaced at least temporarily by a member of its board of directors.
Business media reported that the change was necessary because Campbell’s stock was down 29 percent this year; after her departure, it dropped further, to its lowest level in five years. But until the past year, Campbell’s stock had consistently risen under Morrison, even delivering a better return than the S&P 500 index. In fact, the same media recognized that Campbell faces the same situation as other companies in its market – a long-term trend away from processed foods to fresher, healthier alternatives. Sales have been down for the past few years and now inflation has help to drive up costs.
Morrison has received mostly positive press during her tenure as CEO. In its report on CEO reputation, the Reputation Institute cited her positive effect on the company’s reputation. It noted that Morrison had Campbell pull out of an industry trade association because the association’s stance on GMO labeling “no longer aligned with Campbell’s values,” and said she was putting principle over profit.
Apparently, Campbell’s board and its investors have a different philosophy. Like most of Wall Street, their focus seems to be on short-term gain; that is, how much can we pump up the stock and make a profit in the short term? Its interim CEO provided a clue when he was quoted as telling employees that “as a public company, Campbell was for sale every day, but that his strategy was not to sell the company.” However, other comments he made on an analyst conference call create the impression that sales and/or mergers are likely.
Morrison’s leadership help to raise Campbell’s profile and improve its reputation. Ironically, that likely made the company more valuable, which should help as the company is sold or broken into pieces. As a result, Campbell will become a company facing the same trends it does now, but one only concerned with costs…in other words, just like nearly all other companies in the industry. That’s not a long-term recipe for success.
