The Drumming Out Of Bill FifeZachary Schiller
Since William J. Fife Jr. took over as chief executive of Giddings & Lewis Inc. in 1989, the machine-tool maker has compiled a record most companies would envy. Its stock has more than tripled (chart), and earnings have surged. And the gutsy 1991 acquisition of Cross & Trecker Corp., a troubled rival nearly twice its size, allowed it to seize the leadership of the U.S. industry. "You can't say enough about what a good job Fife has done with this company," says Keith N. Tufte, an analyst with IDS Financial Services Inc., a big G&L shareholder. Director Clyde H. Folley agrees that Fife did an especially fine job turning around C&T.
Make that G&L CEO Clyde Folley. In late April, in a move that stunned investors and sent Giddings' stock plunging 6 3/4 points in one day, to 20 1/2, the 56-year-old Fife submitted his resignation. A company statement cited policy differences with the beefy, self-made executive, some financial transactions between Fife and the company, and "a communications lapse" between him "and the company's management." The company quickly named Folley, a board member and retired vice-chairman of Ingersoll-Rand Co., to take the company's helm until a new chief can be found.
FOLLEY'S TALLY. Many outsiders wonder, though, if there wasn't more behind Fife's departure. By themselves, the transactions that caused the board concern don't seem especially egregious. According to Giddings' proxy, last June Fife sold his Missouri condominium, which is used for company business, to Giddings without an independent appraisal of the price. In December, he and the company simultaneously bought adjoining land parcels outside the company's headquarters in Fond du Lac, Wis. And a company owned by Fife's brother was paid a $105,577 commission to serve as auctioneer at a Solon (Ohio) plant G&L had closed. Other G&L directors won't talk, but Folley gripes that he didnot know about the transactions until January, when they came out in proxy disclosures.
Advised by his lawyers not to talk, Fife isn't answering questions about his resignation. But one source close to him argues that he may have been done in at least in part by differences with the board over his interest in more drastic cost-cutting to keep earnings growing as orders have slacked off.
More than anything, though, Fife may have antagonized the board and his lieutenants with an attitude that G&L was his to run as he saw fit. According to Folley, directors didn't always get monthly financial statements on time; instead, they were sent "sporadically." There was no succession plan, and Folley says his requests that Fife hire a president went ignored.
There are also some hints that executives under Fife simply became fed up with his autocratic style. Although Folley says there was no management rebellion, some ex-managers suggest that a group of top managers gathered evidence on Fife's alleged shortcomings and presented it to Giddings' audit committee, leading to his resignation.
And to be sure, the hard-charging onetime steel-mill sweeper could be overwhelming. He didn't take vacations and frowned on employees who did. "He expected everyone else to spend 150 hours a week on the job," says Howard L. Rich Jr., president of Lynd-Farquhar Co., a Giddings distributor. And former managers say Fife sometimes publicly berated underlings. He also didn't do a lot of delegating. "All decisions had to be made at the top or near the top," says Folley.
DANGER SIGNS. Still, not everyone was glad to see Fife go. "Any time we needed help, Bill Fife was there," says Robert W. Gunn, president of G&L distributor Rudel Machinery Co. in Shelton, Conn. Filling his shoes won't be easy. In the first quarter, sales were flat at $140 million, but the company produced an impressive 73% earnings gain, to $10.2 million, by cutting overhead and production costs. And Richard C. Kleinfeldt, the Giddings CFO who was named acting president, argues that G&L "is in very solid shape," with only minimal debt.
But there are also signs of weakening. After years of strong orders, for instance, Giddings has reported three successive quarters in which bookings dropped vs. the previous year.
Fife himself might argue that he has left a team in place that can keep Giddings on track. A year ago, when asked if he was too much of a one-man band, he replied: "It's the creativity of the people that's made the success of this company, not me." Now that he's out, it's up to the cadre he left behind to prove he was right.