Earlier this month, Goodyear Tire & Rubber Co. appointed Mark Stewart as its new CEO and president, effective Jan. 29, replacing longtime Goodyear Chairman, CEO and President Rich Kramer.
Stewart joins Goodyear from auto manufacturer Stellantis, where he served as chief operating officer of North America.
What does this mean for Goodyear? Tire industry analyst John Healy of Cleveland, Ohio-based Northcoast Research Holdings LLC shares his thoughts in this MTD exclusive.
MTD: Goodyear’s new CEO, Mark Stewart, is from Stellantis. What does hiring a former automobile manufacturer executive to be CEO of Goodyear mean?
Healy: From my standpoint, I think they're trying to find a CEO who understands the history of what Goodyear is as an automotive supplier, but also has a feel for where the industry might be going in terms of distribution, manufacturing and retail. It might not be the same approach it’s been for the last 125 years or so.
I think they did a nice job of finding someone from the auto industry (who) also has spent time at Amazon and has been outside of the automotive dealership and repair business. He’s clearly been successful in both arenas, so I like this candidate (based on) what he brings – both old economy and new economy experience.
MTD: Some other top-level executive changes are taking place. Darren Wells, the company’s executive vice president, is leaving Goodyear in February. Steve McClellan, longtime president of Goodyear Americas, is leaving in April. Does that mean the Elliott Investment Management LP is now calling the shots or exerting more influence on the company?
Healy: I think what it means is the board has looked at a lot of different ways to reposition the company for the next decade or so. I’m sure there were a lot of soul-searching moments in Akron about ‘What should we be doing going forward as it relates to how this business looks?’ I think Goodyear's board and management team have identified businesses they’re going to think maybe differently about and they’ve put in some succession planning.
I don’t think Elliott necessarily is trying to call the shots. I think what Elliott wanted to do was bring about change... in a way that creates more value for shareholders. I think they called a time-out to say, ‘We need to look at what’s going on here. Do we need to do this a different way?’
MTD: Do you expect the new CEO to bring his own person in to fill the Goodyear Americas president role or do you expect to see an internal promotion? What would be the advantages of bringing in someone from the outside?
Healy: The advantages would be perhaps having a different view of distribution and where that's going. Personally, I think dealers and distributors like having someone from within the industry who can be their internal counterpart. To me, the ‘best available athlete’ would be what I’d try to pursue, but I would look pretty hard internally to see if I could find that person.
I think tires are unique and I think dealers have unique expectations and speak the same language. To install someone who doesn’t speak the language and doesn’t understand the language, you could lose some share pretty quickly, so I would be cautious to go outside the industry.
MTD: Goodyear announced that Laurette Koellner, independent lead director of Goodyear’s board since 2019, will become non-executive board chair and Stewart will be added to the company’s board as a director. Do you have a feel for what her role will be?
Healy: I think she’s taking on kind of the apex (position) on the board. My sense is that she’s stepping in as the chairperson and it probably doesn’t make sense to have a CEO be the chairman of the company at this point, from the standpoint of keeping better corporate governance. I think it makes sense.
MTD: Do you think splitting the chairman function from the CEO function has some advantages?
Healy: I think it does for shareholders. Ultimately, the board of directors is supposed to be a representative voice of the shareholders. They're supposed to represent the shareholders and make sure management is running the business in the best way and making decisions that maximize value. So I think sometimes having the chairman separate from the CEO position is good corporate governance. I’m not sure what the statistics are or if there’s empirical data that supports (that) this creates more shareholder value, but it’s definitely preferred amongst some of our clients.
MTD: Do you think it will be a while before Stewart starts making key moves in terms of personnel and other things? The mandate is there to sell the chemical and OTR tire businesses and the Dunlop brand, plus find $1 billion in cost savings. Do you expect him to get his bearings first before making any big moves?
Healy: Hard to know. My guess is all of those initiatives – whether it’s business alternatives in terms of sell or (forming) a joint venture and the cost rationalization plans ... I think a lot of those things have probably been put in motion. I wouldn't have any expectations that any of those things would be put on hold right now.