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Eastman CEO outlines exit strategy

Sharon Hayes • Dec 9, 2008 at 12:00 AM

KINGSPORT — Outgoing Eastman Chemical Co. Chairman and CEO Brian Ferguson began considering an exit from the company earlier this year and made up his mind last Thursday to leave next spring, despite the current economic downturn.

“It’s not like I’m leaving just because we have trouble. I’m going to be here for all the hardest parts of the recession,” Ferguson told industry analysts in a conference call early Tuesday.

Eastman announced Monday that Ferguson will step down as CEO after the May 7 annual shareholders meeting. He will continue to serve as executive chairman of the board through 2010.

James P. Rogers, president of the company and Chemicals and Fibers Business Group head, has been tapped to serve as president and CEO to succeed Ferguson.In Tuesday’s conference call, Ferguson said he set out to achieve several key goals when he took on the CEO role six years ago.

“When I started in 2002, we’d already had two or three bad years. There were things that needed to be fixed in the company clearly. And so the first objective was to restore basic financial health,” he said.

Ferguson undertook drastic steps to improve profitability such as restructuring, divesting and consolidating businesses — some of which had been acquired under the leadership of Ferguson’s predecessor, Earnie Deavenport Jr.

“We had gotten into that jam because of some flawed business and commercial decisions that the company had made,” Ferguson said.

“So the next thing on the agenda was to pick up the level of business and commercial skills and judgment across the company.”

Ferguson said he worked to build a culture that was more results-driven, holding managers accountable for the company’s performance.

And Ferguson said he set out to pursue a strategic vision that would sustain and grow the company well into the future.

“As I look at the progress of these goals today, they have either been accomplished or they are well on the way to being accomplished,” Ferguson said.

Earlier this year, he began considering, in consultation with Eastman’s board of directors, what would be the “appropriate time for me to wrap this mission up.”

In October and November, when the economy took a nosedive, Ferguson wondered if he was doing the right thing by exiting anytime soon.

“I had some serious consideration and thought — was I doing something that would ill serve the company by timing it now?” Ferguson said.Ferguson pointed out he will still be at the helm until early May.

“All of the decisions that we will make relative to dealing with an economic recession will be made in the next month or two,” he said.

“The other thing is — I have complete confidence in the durability of the company. I have complete confidence in the management team. Jim (Rogers) and I have been side by side, working on fixing the company and building a future for the company for a decade now. If I had any doubts about the durability of the company or the strength of the management team, I would not have undertaken this decision,” he said.

Ferguson said Eastman’s Chemicals and Fibers Group, which includes the Fibers, Performance Chemicals and Intermediates (PCI) and the Coatings, Adhesives, Specialty Polymers and Inks (CASPI) segments, has “absolutely excelled” under Rogers’ leadership.

“As a member of our executive team, Jim has played an exceptionally active and important role in shaping the company’s current strategic plan and our growth strategy,” Ferguson said. “I feel very lucky to have someone with Jim’s judgment and character and expertise and experience to take the CEO position role.”Rogers said Eastman’s financial position is sound, and the company is taking actions to withstand the difficult market environment.

“When I compare where we are today versus where we were back in 2001, it seems as different as night and day to me,” Rogers said.

“When the economy rebounds, we will be strategically positioned to take full advantage of the recovery,” he added.Rogers said he’s committed to the company’s plans already in place to deliver results over the near and long terms.

“What I’m really excited about is trying to get people to lift their heads up and look past this valley and look at what we’ve created here at Eastman and the shareholder value that I think we’re going to create over the next few years. I personally think it can be tremendous,” Rogers said.

As for the future, Ferguson said he is “not actively seeking another engagement with another company.”

“I do have some personal objectives that are impossible to pursue when you hold a job that is all-consuming as a CEO position is. Those will evolve over time,” Ferguson said.

One analyst asked Ferguson if he has political aspirations, saying “you have my vote if you decide to run for office.”

“I have too little patience and too much conscience to ever consider a political career,” Ferguson replied.

Headquartered in Kingsport, Eastman manufactures and markets chemicals, fibers and plastics and posted sales of $6.8 billion in 2007. The company employs 10,500 people worldwide, including 7,000 in Kingsport.

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