When Ed Zander accepted the job of CEO of Motorola (MOT ) in December, 2003, Wall Street cheered, boosting Motorola's stock 4%. Inside the Zander household, there was also a palpable sense of pride. The Motorola job gave Zander the chance to cap his career by becoming top dog at a major company, and a corporate icon to boot.
The former COO of Sun Microsystems (SUNW ) had spent a career climbing the corporate ladder before the lack of a succession opportunity encouraged him to bolt Sun for private equity firm Silver Lake Partners. "I had been working all my life to reach a certain point," Zander says. "My wife and I looked at each other and said, 'Why not give this a shot?'"
Well, because most execs these days think such a move is bonkers. Virtually everyone on the move in Zander's peer group has been racing away from publicly traded companies toward private equity -- the lucrative, cushy, autonomous world Zander left. At private equity funds, execs avoid life in a corporate fishbowl where federal regulators, shareholders, and the media criticize a CEO's every move. "The advice I got [before taking the job] was, 'You're crazy,'" Zander says. "[They said] 'It's not the right time to be a CEO.'"
There's no denying Zander was experienced his share of scrutiny while at Motorola. The press lambasted him last spring when his $6.5 million salary, including a deferred bonus, was revealed. And though his two-year tenure turning around the company has been a monumental success, his battles are hard-fought and the rewards hard-won.
Despite surging revenue and market share, analysts have criticized Motorola for operating margins that trail rival Nokia's (NOK ). Though the stock has risen during Zander's tenure, it also experienced curious slumps, such as in early February, after the release of two hot new phones that "the market completely overlooked," says Deutsche Bank Securities analyst Brian Modoff.
The irony is that Zander was probably making even more money in private equity. "The economics of private equity and venture capital, if you do it right, are really good," he says. He would not comment on his specific earnings. But industry experts say partners of major funds like Silver Lake divide huge sums -- as much as hundreds of millions of dollars -- between them. These sums include management fees and a share of profits from the companies they invest in. Nothing about this is filed in the public documents.
So what in the world was Zander thinking? "I just thought weighing the risks, Motorola was a good ethical company," he says. "I wasn't a CEO. It was an opportunity afforded me and I took it."
But Zander's logic goes deeper. He worries that the chief executive profession is missing out on the best and brightest, just like teaching and politics. So, he didn't want to turn down a CEO spot because it is stressful. "I'd like to think our CEOs are the best people who can lead and create intellectual capital and retain competitiveness," he says. "If you have the best leaders in industry, I think you are going to do well as a country."
Then there are Zander's more personal reasons. Motorola simply offered him a chance to do what he loves most. The gregarious Zander says he thrives on "getting employees to wake up every day and go into battle." By contrast, private equity offices are serene places, with few people roaming the halls and hardly anyone to manage.
Should Zander ever want to return to private equity, a stint as CEO will only enhance his marketability. Managing the relationship with the board of directors is a "flat spot" that many No. 2 exec's have, says John Thompson, vice-chairman of executive recruiter Heidrick & Struggles International. By serving as CEO, Zander gains first-hand knowledge of corporate governance.
The Motorola job fits squarely into Zander's zone of expertise and passion. After 25 years working in the tech field, he understands the strategic issues. Plus, he's a trained marketing guy who absolutely loves tech products. Fiddling with a new gadget puts a twinkle in his eye.
"I don't think there's any other situation that could have pulled him out of Silver Lake," Thompson says. Still, as most execs turn from public companies to private equity, "Ed's situation is a bit of an anomaly." Crazy or not, he's happy for now.
By Roger Crockett