UPDATE: Deere Picks Replacement For CEO Robert Lane
02 June 2009 - 2:54AM
Dow Jones News
Deere & Co.'s (DE) board named Samuel R. Allen, president of
the company's construction and forestry equipment business, to
succeed Robert W. Lane as chief executive starting in August.
As part of the transition, Allen, 55, was appointed chief
operating officer and president beginning Monday. He also was
appointed to the company's board.
Lane will continue to serve as chairman until Allen's expected
appointment to that job. A timetable for that move hasn't been
set.
Moline, Ill.-based Deere is the world's largest producer of farm
machinery by revenue. The moves come at a turbulent time for Deere
as lower farm commodity prices and tighter credit have put the
brakes on a five-year long boom in farm machinery sales.
Allen will be the ninth chief executive in the company's
172-year history. He has been president of the construction
business since 2005.
The collapse of the housing construction industry in the U.S.
has steadily eroded sales of Deere's construction equipment since
2007. But the company's tight control over costs and inventories
are credited with allowing Deere to avoid the massive employee
layoffs and idle plants deployed by competitors Caterpillar Inc.
(CAT) and CNH Global N.V. (CNH) in recent months.
Allen started as an engineer with Deere in 1975 and moved
through a variety of management posts. Before heading the
construction and forestry business, he was responsible for global
operations of Deere's power systems group and held senior executive
positions with the company's customer finance arm, John Deere
Credit, human resources and industrial relations.
Lane, 59, who joined the company in 1982, has been CEO and
chairman since August 2000. His departure caught company observers
by surprise. But Deere said the move has been under consideration
for the past 18 months.
Lane's tenure has been marked by extraordinary growth in revenue
and profits in a highly cyclical business. Rising commodity prices
in recent years drove up farm incomes, translating into increased
demand for Deere's tractors and combines.
Lane's lasting mark on the company, however, will likely be his
operational reforms focusing on the relationship between Deere's
income and its production costs.
"He's made a lot of important restructuring initiatives that
have contributed to their performance over the last few years,"
said John Kearney, an analyst for Morningstar Inc.
Lane devised a complicated metric for measuring Deere's cost of
capital against its pretax operating income that is now applied to
all of Deere's business units. The system also is linked to
employees' performance bonuses.
Observers expect Allen to continue the system. The company did
not make Allen available for comment.
Michael Mack, Deere's chief financial officer, will replace
Allen as head of the construction and forestry business. Succeeding
Mack as financial officer will be James Field, who has been
president of the company's commercial and consumer business.
Deere's stock was recently up 7.73% at $46.83 a share.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
(Tess Stynes contributed to this report)