McCormick chief sticks to his word

THE BALTIMORE SUN

At a board of directors dinner four years ago, Charles P. "Buzz" McCormick Jr. bestowed upon his heir apparent an honorary hockey stick. Embossed on the handle, along with the McCormick & Co. logo, were the words "War," "Turnaround" and "Success."

"We were in the war, and he said we'll come out of the war and go into a turnaround phase, and that's where we'll turn the company around, and move then to the success phase," said the recipient of the stick, then-company President Robert J. Lawless. "That's the vision that Buzz McCormick had of what McCormick would go through."

Looks like he was right on the money.

Lawless, a former hockey player, has been chairman of McCormick for a little more than a year and chief executive for three. In that time, the company won a market-share war against a rival spice producer, turned around its fortunes and is enjoying record earnings, though you might not know it from the yawns on Wall Street.

"I think he's done extremely well," said Kurt Funderburg, an analyst at Ferris, Baker Watts Inc. in Baltimore. "If you look at both the operational performance and financial performance of McCormick over the past few years, you definitely can see an improvement from where things were before Bob came in."

Lawless, 53, doesn't like to acknowledge he had a lot to do with the company's achievements. Instead, he heaps praise on McCormick's work force, which is more than 2,000 strong in Maryland.

"I feel I'm just here and I'm a catalyst to make it work. I think if you asked people in the company, 'What about Bob Lawless?,' I would think they'd say 'Energy beyond belief, a whole focus on accountability,'" he said, bounding over to his desk to grab a small laminated card that reads "Do what you promised you would do."

"It's very simple, and it's worked, it's really, really worked," he said. "Do what you promised you would do. Accountability is really important, performance is important."

Lawless and other members of the close-knit executive team ("you could take a strong putter and hit all of us in a given day") publicly set three goals for 1999 - to increase sales 5 percent to 7 percent (sales in fact rose 6.6 percent); increase gross margin by 1 percentage point (it went up 1.2 percentage points); and raise earnings per share by 12 percent to 15 percent (excluding charges, they rose 18 percent).

During the past three years, Lawless and his staff streamlined operations - cutting 300 jobs, mainly overseas, and closing a plant in the United Kingdom. They also reorganized the top echelon of the company and eliminated Lawless' former position of chief operating officer.

They aggressively fought for grocer contracts, beating back the threat from Burns Philp, an Australian company that makes the Spice Island and Durkee brands. (The Federal Trade Commission feared McCormick might have been too aggressive and conducted a three-year investigation into anti-competitive behavior. The case was settled this year, with McCormick paying no monetary damages but agreeing to give the FTC regular access to its contracts for the next five years.)

Lawless also put a stronger emphasis on products designed for people who want to cook at home but don't have time to create everything from scratch. He re-launched the dry seasoning mixes - packets that contain spice blends for foods such as pasta and beef - and instituted the Meal Idea Center, a color-coded display highlighting the packets.

Lawless also boosted the company's advertising budget - nearly nonexistent several years ago - to the $30 million range.

"A lot of little things are being done better that have added up to extraordinarily strong earnings growth," said Mitchell B. Pinheiro, an analyst at Janney Montgomery Scott LLC.

Even so, many say it's time for Lawless to move into a higher gear.

"What Bob hasn't demonstrated yet is aggressiveness," Pinheiro said. "We haven't had any acquisitions, we haven't seen any bold initiatives or new product initiatives that would bring the McCormick brand outside of the spice and seasonings area."

Though the company hasn't made a major purchase in the past five years, Lawless said McCormick does have an "active" acquisition program.

"We have people that we're interested in," he said. "All I can say is when they become for sale, we will participate. The key component in that is that we will participate, but we want to preserve shareholder value. ... We're not going to overpay."

Just late last week McCormick said it was in the "well-advanced" stages of negotiating to buy Ducros, a French spice and seasoning maker that had net sales in 1999 of nearly $250 million. Analysts said it would be a good fit for McCormick but reserved final judgement because the acquisition price is still unknown.

It's a good bet Lawless will go after target companies with everything he has.

"He's intensely competitive; I'd hate to run into him on the ice," said James J. Albrecht, who retired from McCormick in 1998 after 16 years at the company. Lawless worked for him as vice president of the international division. "He's physically strong, a tough competitor, as he is in business. He doesn't like to lose."

Lawless attributes his competitive streak to his history as a teenage jock.

"I grew up in competition, and that has followed me all my life," he said. "People would say I'm a very competitive person, and I am."

Lawless and his younger sister grew up in Petrolia, Ontario, in "humble" surroundings. His father was a foreman at the electric company, and his mother was a homemaker. In the town of 3,000, Lawless kept busy with sports - baseball, golf, football and hockey.

He played center on a junior hockey team - a level from which players are drafted into the National Hockey League - when he was in his middle and late teens.

"I really wanted to follow hockey, but my father encouraged me to go to college," Lawless said. "I really think that was a good decision."

He studied chemistry and graduated from St. Clair College of Applied Arts and Technology in Windsor, Ontario, where he was named athlete of the year, in 1968. He returned in 1998 as commencement speaker at the spring graduation and received an honorary diploma.

Lawless calls himself a product of the MMB, not an MBA. McCormick's Multiple Management Board brings employees from different levels of the company together for six-month terms to tackle various projects.

"It gave me confidence to stand up in front of people, any size audience, and feel comfortable," Lawless said. "Secondly, it was an indoctrination in all functional areas of the company. I knew nothing about finance, and MMB exposed me to financial projects and the financial aspects of business.

"I know self-taught is a mundane word in the business world today, but I do catch on pretty quick," he added.

His executive assistant, Georgia Jubb, said Lawless can retain an amazing amount of information and doesn't need to review information once he's looked it over. She said he's "intense" in his work but doesn't keep employees walking on eggshells.

"He's very optimistic. You never see him angry or upset or pensive. He deals with each issue and goes on from there," she said. "He loves being with people, and he has a phenomenal memory; he can meet people once and remember their names."

Loaded with energy

Lawless "has got more energy than anyone I've ever met in my life. He certainly exceeds mine and everyone else I know of," Buzz McCormick said. "He's just the perfect guy to run the company at this point, and he's doing a heck of a job. I think the company is really doing a lot better than the stock market realizes."

Since the beginning of the year, McCormick's shares have averaged about $30.

Analysts say McCormick is partly victimized by the fact that food stocks are generally out of favor. The 16-member Standard & Poor's midcap food index, of which McCormick is a member, sank nearly 24 percent during the past 52 weeks. It is also an "Old Economy" stock, the type that has largely been ignored by investors in recent years. (If McCormick had America Online's price-to-earnings ratio, its stock would be trading at $285.)

"My view," Lawless said, "is we have to just continue to perform and the stock price will take care of itself."

Lawless started his career at Minnesota Mining and Manufacturing (3M) Canada, joining McCormick in 1977 as distribution manager for Club House Foods Inc., a Canadian McCormick subsidiary.

Lawless moved up the ranks to become CEO of McCormick Canada; group vice president of McCormick & Co. in Europe, at which point he moved to England for a year; and senior vice president of McCormick/Schilling in Sparks in 1994.

"He's a very sharp businessman - quick on the uptake regarding financial matters," said Marshall J. Myers, who retired as McCormick's vice president of research and development in 1998.

Myers said Lawless' predecessors began the task of changing the mindset at McCormick from a job-for-life corporation to thinking about the 111-year-old company as a growing, global organization. Then Lawless came in and finished the task, putting more focus on controlling costs, investing in the company and beefing up research and development.

"Now it's a results-oriented culture without taking away the old McCormick family kind of atmosphere," Myers said. "It took a long time for some of the old-timers to understand they had to produce, that results were important."

Sense of urgency

Even with his reputation as a self-starter, Lawless' rise to the top would likely have taken a more circuitous route were it not for a series of unfortunate events.

In 1994, McCormick's chairman and chief executive, Bailey A. Thomas, died unexpectedly of a heart attack. Buzz McCormick, grand-nephew of the company's founder, came out of retirement to resume his job as chairman and assist H. Eugene Blattman, who was promoted to CEO. But Blattman resigned the next year, after announcing he had a heart ailment. Buzz McCormick then took on the CEO role as well and named Lawless president of the company. A year later, Lawless was chief executive.

Lawless' style isn't viewed as radically different from those of his predecessors, though people who have worked with him say he delegates more authority than did others and is seen as more gregarious.

"He has a higher sense of urgency - 'Let's get it done, let's do it now,'" said Executive Vice President Carroll D. Nordhoff, who has been at the company for 30 years.

He said Lawless also has "the ability to generate willing followers who see his vision, believe in his vision and are energized by his vision and get aboard. That's very much his strong suit."

While Lawless sits on a number of boards - including the United Way of Central Maryland, the Kennedy Krieger Institute and the Greater Baltimore Committee - he is not a high-profile mover and shaker in the community. "He's a quiet player. You don't see him in and out of the Center Club frequently," said Donald Hutchinson, president of the GBC. "He's a very, very well-respected guy. Quiet, unassuming, and he's a guy everybody feels comfortable with."

'Be yourself'

Lawless, whose salary and bonus totaled $1.37 million last year, said he and his wife of 30 years have tried to avoid the trappings of CEO life. "My wife, Cathy, who's my greatest supporter in life and my best friend - every day before I leave the house, Cathy says one thing to me: 'Be yourself,'" said Lawless, whose only child, Kristen, is an elementary school teacher in Ontario. "And that's important to me, because that sets a perspective in my life."

When he's not traveling on business, to which he devotes about half his working time, Lawless arrives at work in his 1998 black Cadillac at 7 a.m. and is back home - in Hunt Valley, about 1 1/2 miles from his office - by about 6:30 p.m.

The former athlete, who stands 5 feet 11 inches, doesn't have a regular exercise regimen, but he is an avid golfer, and he and Cathy love to dance. They also are active in their church, Timonium Presbyterian, and he often speaks at Christian business organizations.

With the McCormick company's mandatory retirement age of 65, Lawless could remain in his post for a dozen more years, but he says that's not likely.

"I think there's a number of years - and I don't know what that is, because I'll know when I get there - when you've kind of used up all the brain cells and used up all your energy.

"This drains you, this job, pretty good with all the travel, and I think there's an appropriate time to disappear," he said. "I think most CEOs will tell you: When things are good, it's the greatest job in the world. When things are difficult, it's one of the least appealing jobs to have. It's good right now at McCormick."

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