NEWTON, Iowa (Bloomberg) — Maytag Corp. Chairman and Chief Executive Lloyd Ward resigned and was replaced by his predecessor after a 15-month tenure in which the appliance maker's profit shrank and share price plunged.
Ward, 51, left because of differences with Maytag's directors over "strategic outlook and direction," the third-largest U.S. maker of large appliances said in a statement. Leonard Hadley, an employee since 1959 who retired after seven years as chairman, will replace Ward until a search for a permanent successor is completed.
Since Ward succeeded Hadley, Maytag has told shareholders three times that profits will be less than forecast as the company lost customers to bigger U.S. rivals Whirlpool Corp. and General Electric Co. and Sweden's Electrolux AB. Shares of the 107-year-old maker of Maytag, Jenn-Air and Hoover appliances, which gained 31 cents in late morning trading, have dropped about 63 percent to $29.31 during Ward's tenure as CEO.
"Obviously, the man has been working under a lot of duress," said David Yucius, a money manager at Randy Seckman & Associates, which owns about 15,000 Maytag shares. "The industry is going through a lot of turmoil."
The Maytag executive responded to shareholder pressure for higher profits and share prices with a plan to sell more stoves, washers and dryers that had new features and pricetags as high as $1,000, twice the industry average. Earlier this year, he promised to increase the company's per-share profit in the second half by at least 15 percent.
Maytag on Sept. 14 said second-half profit would fall because of lower-than-expected sales at Circuit City Group and Heilig-Meyers Co. stores. The stock has tumbled 19 percent since then, and some analysts and shareholders said the likelihood of Ward's departure increased.
"He had been trying to take a long-term strategy," Yucius said. "He just ran out of time."
Ward, one of few black executives to head a large U.S. company, joins several CEOs who this year were replaced by a predecessor. At Lucent Technologies Inc., Henry Schacht returned after the ouster of Richard McGinn.
Xerox Corp's. Paul Allaire stepped back into the CEO's job after Richard Thoman left. At Campbell Soup Co., David Johnson returned as interim CEO after Dale Morrison resigned. And Procter & Gamble Co. tapped John Pepper as chairman after the departure of Chairman and CEO Durk Jager.
During the time Hadley ran Newton, Iowa-based Maytag, profit rose more than fivefold, annual sales jumped 65 percent and Maytag shares rose fourfold. Ward joined in April 1996 as executive vice president and president of Maytag Appliances, and became president and chief operating officer about two years later.
In September, 1999, with Ward still settling into the CEO job, Maytag warned that profit for the second half of last year would be below analysts' estimates because of sluggish sales of lower-priced appliances. Maytag's stock dropped by almost a third that day, wiping out about $1.3 billion in market value.
Investors' frustration with the company increased when Ward said Maytag delayed giving the earnings warning to try to fix the problem. The company had beaten analysts' estimates for five straight quarters.
In February, Maytag said first-quarter profit would be less than expected. Analysts said Coca-Cola Co. reduced orders for Maytag's Dixie-Narco refrigerated vending machines. Maytag's shares fell as low as 26, prompting Ward to buy $820,000 of stock on Feb. 17 and 18 at $26.50 to $28 apiece.
Ward bet on new products that include a $179 Hoover bagless vacuum, a Neptune front-loading washer with a built-in water heater and a $3,500 Jenn-Air Accellis oven that the company says cooks food five times faster than a conventional oven.
The average industry prices for some of these appliances range from $425 to $450, analysts said. Maytag started selling more higher-priced appliances in 1997, when it introduced a Neptune washer that the company said saved water and energy and was gentler on clothes.
An increase in profit and share price may be the only way to keep Maytag from being taken over, analysts said earlier this year.
Electrolux may be interested in buying Maytag, analyst Nicholas Heymann of Prudential Securities wrote in a report on June 13. Two days later, Electrolux Chief Executive Michael Treschow said that his company plans to expand in the U.S. About 90 percent of Maytag's sales are in North America.