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Others likely to gain from CEO searches

As Compaq and HP search for new chief executives, other high-tech companies may lavish promotions on their own top guns.

As Compaq and Hewlett-Packard simultaneously search for a new chief executive, industry watchers say this marks a rare event and will likely bring other high-tech executives big promotions and raises in order to keep them at home.

"I can't remember the last time that this happened in any industry," said Scott Scanlon, chairman of Hunt-Scanlon Advisors, consultants to the executive search industry. "Compaq and Hewlett-Packard are real significant American-brand companies and the top industry leaders."

In sizing up the CEO-search landscape, Jeff Christian, chief executive of executive search firm Christian & Timbers, said: "CEO searches at very large companies are rare. Even rarer still is to see two of the top three computer companies looking for a CEO at the same time."

Christian's firm is handling the search for Hewlett-Packard, while executive search firm Heidrick & Struggles is overseeing the Compaq search.

"We're assuming some of our better candidates are also being pursued by Compaq, but that won't change our approach or diligence," Christian said, adding that competition for high-tech executives in general has been heated for the last few years.

Meanwhile, Scanlon notes that Compaq and Hewlett-Packard may not be fishing from the same pond for all of their CEO candidates. In fact, Scanlon estimates the overlap may be as little as 25 percent.

Gerard Roche, chairman of Heidrick & Struggles, agrees.

"I don't know the [specifications] on the HP search, but I do know Compaq. They want to cast a wide net and focus on leadership and management. They don't have to limit themselves to the technology field," said Roche. "My guess is that HP's specs will have to do more with the computer industry than ours."

Hewlett-Packard in March announced it would split its struggling company in two and name a new CEO for its computing and imaging company. Chief executive Lewis Platt said he would step down from active management after the reorganization. Compaq, meanwhile, ousted its chief executive Eckhard Pfeiffer last week, shortly after the company surprised Wall Street by issuing a preliminary warning that its first quarter would fall far short of expectations. The company has been battered by low-priced PCs, difficulty in absorbing its acquisitions of Digital Equipment and Tandem, and has faced hurdles in adding direct sales to its distribution mix.

Both search firms declined to reveal their list of candidates. But industry watchers said there are some top executives whose names tend to pop up often when a big-name tech needs a top gun.

Those frequently mentioned include Rick Belluzzo, chairman and chief executive of workstation maker SGI, Ray Lane, president and chief operating officer at database maker Oracle, and such outside hitters as George Fisher, CEO of photography giant Kodak. One name that will be hard to attract is Edward Zander, Sun Microsystems' chief operating officer, who last week was given the additional title of president.

Zander declined to comment whether headhunters have approached him. Scanlon characterized Zander's promotion as a "brilliant," block-and-tackle move by Sun chief executive Scott McNealy.

And industry watches said it's likely other high-tech firms will follow suit with promotions and pay raises to their top executives.

"The race is on for top talent, so companies that understand they have top talent will make efforts to keep them in this climate," said Peter Felix, president of the Association of Executive Search Consultants.

With two top CEO posts open, the stakes are rising in the high-tech industry for other CEOs and their No. 2 executives, Scanlon said.

"A lot of boards are losing sleep over where their CEO may be tomorrow," Scanlon said.

But executive recruiters contend its not a given that the high-tech landscape will suddenly be littered with promotions and raises.

"I think it's clearly getting looked at by a company's board. If they have their own succession line, they'll make sure those executives are taken care of," said John Thompson, vice chairman of Heidrick & Struggles. "But boards are also sensitive to how they lock in executives with strong financial packages and how it ties into performance for shareholders."

News.com's Stephen Shankland contributed to this report.