Brenda Barnes, who led a vast restructuring of Sara Lee Corp. as chief executive officer for the past five years, resigned beginning of August from the company and the board of directors, where she was chairwoman. Sara Lee\'s board will consider internal and external candidates to succeed Ms. Barnes, 56 years old, who had a stroke in May.
Brenda Barnes, who led a vast restructuring of Sara Lee Corp. as chief executive officer for the past five years, resigned Monday from the company and the board of directors, where she was chairwoman.
Sara Lee's board will consider internal and external candidates to succeed Ms. Barnes, 56 years old, who had a stroke in May.
The likely internal candidates to take over are Marcel Smits, the chief financial officer who has led the company during her absence, and Christopher John Fraleigh, head of its North American retail unit. Mr. Fraleigh, known as C.J., is part of the new office of the chairman, set up to help Mr. Smits during Ms. Barnes's leave.
Mr. Smits will continue as interim CEO during the search process.
"We fully support Brenda's decision to step down as chairman and CEO so she can devote all of her time and energy toward improving her health," said James Crown, who assumed the role of chairman when Ms. Barnes's leave of absence began. "We will conduct a thorough process to identify a CEO successor in a timely manner, and look forward to sustaining the momentum begun under Brenda's leadership."
Mr. Smits, a Dutch executive who spent his career at Unilever and several other European companies, joined the Downers Grove, Ill., concern in October as CFO. This spring, the 48-year-old executive temporarily took command of Sara Lee during Ms. Barnes's leave. In both roles, as CFO and interim CEO, he has demonstrated a hands-on style—even riding a route with a bread-delivery driver.
Before Mr. Smits arrived, Mr. Fraleigh was considered the likely eventual successor to Ms. Barnes. But board members "wanted someone to compete with C.J.," a former Sara Lee executive says. Mr. Fraleigh, along with Ms. Barnes, worked at PepsiCo Inc. in the 1990s and since joining Sara Lee in 2005 has held positions of increasing responsibility.
The next occupant of Sara Lee's corner office would have to complete a sweeping restructuring launched by Ms. Barnes. Once a hodgepodge of apparel, food and household brands sold in much of the world, the company—known for its Sara Lee baked goods, Jimmy Dean sausage and Douwe Egberts coffee—has shed more than 40% its business over the past five years. Ms. Barnes cut costs and streamlined internal processes.
A new chief executive would face heavy promotions at the grocery store and weak consumer spending on food in the U.S. and Europe along with revived competition from private-label foods. Sara Lee's U.S. and Western European bread business has particularly struggled recently.
Mr. Smits, an accountant and tax attorney, held financial and operating management roles at Unilever for 13 years, working in the Netherlands, Colombia and China. Prior to Sara Lee, he was CFO at KPN NV, a Dutch telecom. Soon after he arrived at KPN, Mr. Smits surprised board members and executives by spending several weekend days in numerous KPN phone and Internet-services stores, recalls Dudley Eustace, a former KPN board member who helped recruit Mr. Smits. The CFO, wearing KPN's sales uniform, chatted with consumers and observed store staffers.
"He figured out what the customers wanted," and that helped him get to know the telephone business "far more quickly than I ever would have thought," Mr. Eustace adds.
Mr. Smits also demonstrated his knack for disentangling knotty, costly problems, by paring down the procedures for complying with the Sarbanes-Oxley Act for the then U.S.-listed company. In the mid-2000s, Mr. Smits noticed that KPN had 13,000 different procedures it completed each month to ensure its financial statements were accurate. He directed managers to figure out which procedures were essential for complying with the law and which weren't providing useful information. Within two years, he had helped whittle down the compliance procedures to about 3,000.
Mr. Smits likes to "look at a problem, analyze it in-depth and come up with a well-engineered solution," says Roger Dassen, CEO of accounting giant Deloitte Touche Tohmatsu Ltd.'s Netherlands operations who acts as a liaison to the KPN board.
Mr. Smits decided to leave KPN after realizing he wouldn't become CEO because A.J. Scheepbouwer, the company's leader, preferred a different successor, according to Mr. Eustace and others familiar with his thinking.
KPN said it doesn't comment on succession plans.
At Sara Lee, Mr. Smits dug into the company's operations in ways unusual for a CFO, observers say. He studied the company's balance sheet line by line, then went to see what those items meant in real terms. He arose one day by 4:30 a.m. to ride with a bread-delivery driver in Wisconsin, for example, in order to understand the forces behind bread sales.
The CFO also toured grocery stores in Brazil and Switzerland. He installed his closest deputy in the conference room next to his office so the men could hatch an upgrade of Sara Lee's finance department. The overhaul includes mandating that employees change jobs every few years and tying employees' pay and advancement in the organization more closely to their performance.
As interim CEO, he has traveled frequently, meeting with 14 different investor groups on a two-day stop in London this summer, for example. In presentations and conversations, he has emphasized that Sara Lee would focus on increasing sales of its highly profitable coffee business while improving the operating margin at its bread unit, and doing both for its North American meat operations. Several reports lately have indicated that the company is looking to sell its bread division.
As CFO and interim CEO, Mr. Smits also has pushed Sara Lee to become more transparent about its financial performance. At a February investor conference, he spent 16 minutes explaining how Sara Lee would find the cash to fund its dividend and a stock-buyback plan of as much as $3 billion, which had been announced that day.
Mr. Smits is helping turn around many analysts' perception that Sara Lee "was a dead company going nowhere," says Timothy Ramey, an analyst with D.A. Davidson & Co.