Andrea Jung has been chairman and CEO of Avon Products (NYSE: AVP) since November 1999. She has done an atrocious job as chief executive over the past several years. Her tenure as the head of Avon is an example of how an indecisive board allows a chief executive to stay too long.
Jung’s public image has been positive recently. She was named to a number of top female CEO lists and held up as an example of how far women have come in business. The latest compliments were all given in a period when Avon was in desperately poor shape.
Avon’s share price is down more than 50% in the past two years. Despite recent poor earnings, bribery changes in some of the company’s overseas operations, and an SEC investigation into whether an Avon official made confidential comments to an analyst, Jung made $13.2 million last year. That is up from $9.5 million in 2009.
Fred Hassan, Avon’s lead director who has served since 1999 when Jung became CEO, must take a great deal of the criticism for how long the chief executive held her job as the company faltered. Nearly equal blame can be placed with long-time directors Ann Moore, Paula Stern and Lawrence Weinbach, who have been members since the 1990s. Each has watched the company get into greater trouble. Each can compare the past two years to those during which Avon did much better.
Avon’s board will not disclose its recent discussions about Jung. It does not have to. The lengths to which the board will go to cover its own decisions was evident in comments made when news that Jung would step down was released:
Fred Hassan, Managing Director and Partner, Warburg Pincus LLC, and Avon’s Lead Independent Director added: “Avon’s Board of Directors fully supports Andrea and appreciates her commitment to continue to serve the company as Executive Chairman and assure a smooth and successful management transition. Separating the Chairman and CEO roles as well as strengthening overall management capabilities are important steps to help the company capture its future opportunities. The Board looks forward to continuing to work closely with Andrea and the new CEO to put the company back on a growth track.”
No mention is made of how badly Jung damaged Avon.
Douglas A. McIntyre