Abbott CEO Miles White Chooses Longtime No. 2, Friend Richard Gonzalez to Head Spinoff Company
From Chicago Tribune (IL) (October 21, 2011)
Oct. 20--When Abbott Laboratories decided to split into two publicly traded companies, Chairman and Chief Executive Miles White didn't have to look far for someone to take the daunting job of heading the new standalone business.
White, whose 12-year tenure in Abbott's CEO suite is practically considered a record among his Big Pharma peers, turned to Richard Gonzalez, who had been a longtime No. 2 at the North Chicago-based company and someone he has described as a "close friend."
Gonzalez had retired in 2007 after 30 years with Abbott but was lured back in 2009 to head its medical investment arm. Last year the throat cancer survivor was named head of Abbott's global pharmaceuticals business.
On Wednesday, Abbott took the wraps off a new research-based pharmaceutical company that Gonzalez will lead. Still unnamed, it's expected to have annual revenues of $18 billion. That would make it about the same size as Chicago-based utility Exelon.
The split of Abbott signifies a change of heart for White, who joined the company in 1984.
Only a year ago, White, the second-highest-paid executive in the Chicago area last year, acknowledged in an interview that Abbott faced pressure from Wall Street to split the company and become pure pharma.
"We concluded that, in a world where you have to balance quarterly performance with long-term R&D that can be anywhere from four to 12 years, diversity is a lot better for us," White told Investor's Business Daily in August 2010.
Under White, Abbott's sales have risen from $13.2 billion to $35.2 billion, both through acquisitions and growth from existing businesses. It has raised its dividend for 39 straight years, a track record that's critical to Abbott maintaining what White calls the company's "investment identity," suitable for "widows and orphans."
Harry Kraemer, former chairman and CEO of health care company Baxter International and currently a professor of management and strategy at Northwestern University's management school, said the fact that White and Gonzalez have worked together for so long bodes well for the spinoff.
"If people are compatible then the process can go incredibly smooth for shareholders, who often end up owning stock in both companies," Kraemer said.
Before joining Abbott, Gonzalez, 57, was a research biochemist at the University of Miami's medical school and majored in biochemistry at the University of Houston.
White, 56, is a director of Caterpillar Inc. and McDonald's Corp. Among other things he is former chairman of the Federal Reserve Bank of Chicago. He has a bachelor's degree in mechanical engineering and a master's in business administration, both from Stanford University.
White blamed recent layoffs at Abbott on the pressure of federal regulations as well as the impact of the new health care bill. In an interview with USA Today in March 2010, White described himself as a Republican, though he said at the time that he wasn't familiar with the tea party and didn't watch Fox News.
"I'm as disgusted as anybody with what I see as the inability of Washington to be collaborative," he said.
Federal elections records show contributions primarily to Republicans, though he has also given to such Democrats as Jesse Jackson Jr., Melissa Bean and Danny Davis.
Sen. Mark Kirk, R-Ill., called White a "brilliant and outside-the-box thinker."
He pointed out that White has done spinoffs before, citing Hospira Inc. in 2004. And "there's no doubt what Miles' opinion is on issues he cares about," Kirk said, adding that White's style can be "up close and personal and in-your-face."
"It's the kind of Midwest straight-talking that I approve of," Kirk said, noting that White is as direct as Chicago Mayor Rahm Emanuel. "He's as clear as the mayor, but just missing the f-bomb."
Tribune reporter Gregory Karp contributed.
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Posted: October 2011
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