Comment One man holds all the reins of executive power at EMC - Joe Tucci, chairman, president and CEO. He says management succession planning is a key item - but there is no visible succession plan at EMC. At all.
A person familiar with the situation asks: "What is he (Tucci) doing about this? Who is lined up to take over? There is no succession plan... no one credible lined up."
Contrast the position at NetApp, where COO Tom Georgens basks in CEO Dan Warmenhoven's provisional approval as heir-apparent.
With Tucci in his 62nd year, he has only a few more years of executive leadership left, after which he can be expected to remain on EMC's board. The company is quite open about the need for senior management succession planning. It is part of the corporate governance function which is a board of directors' responsibility.
EMC Board succession responsibilities
The board is organised into various committees, one of which is a Corporate Governance and Nominating Committee. The chair is David Strohm, and there are two other members, Gail Deegan and Windle Priem. Win Priem is also the chair of a Leadership and Compensation Committee whose other members include Michael Brown, Randolph Cowen, and David Strohm.
Strohm is the board's Lead Director, appointed in October 2005, whose responsibilities include "working with the chairman to set the agenda for board meetings, presiding at executive sessions of the 'non-management' board members, and overseeing performance evaluations of the board." Clearly, David Strohm has a kingmaker role, and Win Priem is also hugely influential.
EMC's corporate governance guidelines say "The Board monitors the performance of the CEO and senior management and plans for succession to the position of CEO and other senior management positions." The lead director will "in collaboration with the Leadership and Compensation Committee, approve CEO goals, evaluate CEO performance, set CEO compensation levels and review CEO succession planning."
This is all very open and clear cut with definite responsibilities.
The board as a whole is responsible for CEO selection and performance review. Section 22 of the corporate guidelines states: "The CEO shall submit an annual report to the Leadership and Compensation Committee and the Lead Director (if any) regarding succession planning for the CEO and other senior management positions. This report will include an assessment of senior officers and their potential to succeed to the CEO and other senior management positions."
The CEO also maintains an up-to-date short term emergency succession plan.
This is the CEO succession framework, and we know that the board requires there to be a CEO succession plan and that Tucci himself writes it and that "after review and discussion, the CEO, the Chair of the Leadership and Compensation Committee and the Lead Director shall submit this report to the Board" - meaning Joe Tucci, Win Priem, and David Strohm.
EMC's senior executive officers who have been speculated in the past as potential post-Tucci CEOs include:
- Vice chairman Bill Teuber (not a board director) in charge of worldwide sales and distriobution and an ex-CFO
- Art Coviello, president of the RSA business
- David Donatelli, president of the storage business
- Howard Elias, president of global services
Paul Maritz - recruited to run EMC's cloud business and then parachuted into the VMware CEO spot to replace Diane Green - could also be a candidate, although he is very new to EMC.
El Reg recently learned about a continuity of tenure employment agreement between the EMC board and Tucci, lasting until the end of 2010. Why is this employment agreement in place? Has he threatened to leave before the end of 2010? Is something affecting the control of EMC anticipated to happen before the end of 2010?
An EMC spokesperson said: "This is nothing new. This exact employment agreement was completed in 2007 and disclosed in our 2008 proxy. As he has been doing for many years, Joe continues to work with the EMC Board evolving and advancing EMC's executive succession plan."
According to a person with some knowledge about such things, the entry of Cisco into the blade server business, its OEM'ing of VMware's virtualisation software, and its ten per cent holding in VMware, has influenced the succession planning.
The situation could be that the Joe Tucci CEO succession plan is to have Cisco take over EMC and remove the need for an independent EMC CEO at all. This idea would help explain why EMC has not sold off VMware, made a bundle of money, and obtained a much better price/earnings ratio for its storage business as a consequence. That's the obvious way to add shareholder value to EMC, yet Joe Tucci says VMware is not and will not be for sale.
Apparently Joe Tucci has no VMware stock himself.
A source said that Joe Tucci is sufficiently old now that it is "too late for anyone to come in," indicating that none of the potential candidates above are thought by this person to be of CEO calibre and that the overall EMC CEO succession plan may be to sell EMC and its VMware business to Cisco.
A financial analyst, commenting anonymously, offered this thought: "I don't know about this. I believe that EMC has a deep bench of executives - Donatelli possibly the most visible over the others mentioned. I think making the call that this leads one to conclude that EMC would sell is a bit of a stretch." ®