Navistar replaces CEO with ex-Textron chief
Bloomberg News
Navistar International Corp., the Lisle-based truck maker facing an inquiry from regulators, replaced Chief Executive Officer Dan Ustian with Lewis Campbell, former chief of Textron Inc.
Ustian, who also served as chairman and president, told the board he is retiring “effective immediately,” Navistar said in a statement today. Campbell, who is also a former General Motors Co. executive, was named executive chairman and interim CEO.
Navistar has said it is “cooperating fully” with a request it received from the U.S. Securities and Exchange Commission related to accounting and disclosure matters, according to an Aug. 2 regulatory filing. The company also has been under pressure after an important new engine under development failed to meet U.S. emissions standards. Ustian, 62, has been Navistar's chairman, president and CEO since 2004.
“Dan was a lightning-rod for everything wrong at Navistar,” David Leiker, a Baird Equity Research analyst who rates the company neutral, said in an interview. “Removing that impediment in some investors' minds cleans up the story.”
Navistar rose 2.6 percent to $23.57 at 11:03 a.m. New York time after jumping as much as 9.1 percent. While the shares slid 39 percent this year through Aug. 24, investor Carl Icahn and hedge-fund manager Mark Rachesky have increased their stakes.
The company said Aug. 2 it had entered into an agreement with Columbus, Indiana-based Cummins Inc. on an engine that will comply with Environmental Protection Agency 2010 emissions standards. Cummins will supply Navistar with its urea-based aftertreatment system, which will be added to Navistar's in- cylinder engine.
“We are on the path to getting that product line together and ready for introduction in early 2013,” Karen Denning, a Navistar spokeswoman, said today in an interview. “The board and management are really aligned on the path forward for Navistar and naming an interim CEO is the right thing to do at this time.”
Campbell, 66, was chairman of Textron, an industrial company, from 1999 to 2010 and CEO from 1998 to 2009, according to the statement. Under Campbell, Textron “underwent a significant transformation to increase efficiency of operations, consolidate manufacturing facilities, outsource noncore operations and increase new-product development,” Navistar said in the statement.
“Lewis Campbell is a high-caliber executive who brings to Navistar deep and broad strategic, technical and operational skills and a proven track record of leadership with global industrial companies,” Michael N. Hammes, Navistar's lead director, said in the statement. “We appreciate Dan's many contributions and accomplishments during his 37-year career at Navistar.”
Navistar will offer an update on the SEC investigation when it posts third quarter financial results in early September, Denning said. It will also discuss its decision earlier this month to withdraw its yearly forecast, Denning said. New guidance may not be provided, she said.
“That's probably going to be an ugly earnings release,” Leiker said. “They'll have the negative impact of not having a compliant engine and the new CEO and COO will address investors for the first time. It sets itself up to potentially be a meaningful earnings call.”
Navistar's board also promoted Troy Clarke to president and chief operating officer. Clarke, also a former GM executive, was previously head of Navistar's truck and engine business.
In a note to investors today, Leiker wrote that Ustian's retirement “removes a key sticking point from the investment decision for many investors.” Ustian's departure comes after “the challenges of bringing new technology to market proved too great,” Leiker wrote. “Under new leadership, there is a significant opportunity to refocus employees, dealers and investors.