Do You Need An Agent?: As turnover mounts, more CEOs turn to sports- and entertainment-style negotiators - Careers - Chief Executive Officers - Statistical Data Included

Chief Executive, The, Nov, 2001 by Catherine Fredman

With corporate earnings suffering, stock prices sagging, and shareholders steaming, plenty of chief executives are in the hot seat. However, Joseph E. Bachelder and Robert J. Stucker are sitting pretty. As soon as a corner office opens up, their phones ring.

Bachelder and Stucker are members of a select group of savvy dealmakers who negotiate the entrances and exits of corporate superstars. The 68-year-old Bachelder, who runs an eponymous law firm in New York City, has fine-tuned the fine print on contracts for IBM's Louis Gerstner, Campbell Soup's Douglas Conant, and Bank One's Jamie Dimon. Stucker, president of Chicago-based Vedder, Price, Kaufman & Kammholz, counts blessings from SPX's John Blystone, Delta Air Lines' Leo F. Mullin, and two of General Electric's most famous alumni, Bob L. Nardelli, now head of The Home Depot, and W James McNerney Jr., CEO of Minnesota Mining and Manufacturing. He simultaneously represented Nardelli and McNerney last November after Jack Welch tapped Jeffrey R. Immelt to be GE'S next chief executive.

"Neither of them knew I was representing the other," says Stucker, 56, who closed both deals within seven days of Welch's announcement. His greatest concern during a week of 20-hour days: "Not to call Bob Nardelli Jim and Jim McNerney Bob. I came close a couple of times," he says.

He may walk that tightrope more frequently in the future. Business is booming for these lawyer/agents. After racking up annual growth rates of 20 percent during the 1990s, Bachelder's 10-lawyer firm nearly doubled in size the last two years of the decade. The new millennium didn't start badly, either. "The first six months of 2001 were better than the first six months of 2000, and 2000 was our best year ever," he says.

It seems even the economic downturn is filling their calendars. Turnover in the executive suite is accelerating. The number of open CEO positions among Fortune 200 companies in 2000 was nearly double that of the previous three years, according to a study by Pearl Meyer & Partners, a New York City-based law firm specializing in executive compensation issues. While the pace slowed somewhat in the first half of 2001, it's still higher than in the late '90s. "These are unprecedented numbers," says Pearl Meyer. "If that's happening in the top 200 companies, which are far more stable, you can imagine how the rate at smaller companies has increased."

Regularly scheduled retirement and other normal transitions still account for the majority of the turnover. But growing impatience among corporate boards is an increasing factor in shortening chief executives' tenures. "The honeymoon that the CEO is given to perform has shortened dramatically," says Meyer. "Years ago, a new CEO was given up to three or four years to create the value or do the turnaround or succeed in executing an approved strategy Now it's barely a year or two.

More often these days, when boards become anxious, they look outside the company for talent. But with CEO candidates knowing that the lofty title comes with equally vertiginous risks, no one wants to leave a position of relative security without a commensurate reward--or a guarantee of protection if things don't work out.

Consequently, executive search firms like Spencer Stuart and Heidrick & Struggles routinely recommend that its picks retain outside counsel to deal with their corporate suitors. Often, the advice is redundant, concedes John Wood, senior director of Spencer Stuart. "Most of the time, they've already contacted somebody, Joe [Bachelder] and Bob [Stucker] being two of the names most frequently mentioned."

In fact, the only reason the candidate might not be able to retain his or her first choice of counsel is because the lawyer is working for the company doing the hiring. "The deals have gotten more complex, therefore if one side gets an expert, the other side needs an expert, too," says Wood. Often, the expert for one side may show up on the other side of the table for the next deal.

It's a close-knit club. Bachelder represented AT&T'S board in its negotiations with Michael Armstrong, who was advised by Cravath, Swaine & Moore's Sam Butler--at the recommendation of Bachelder. Butler and Bachelder arm-wrestled each other again over the separation of Richard McGinn from Lucent, with Butler consulting for the corporation while Bachelder worked on behalf of the former CEO. As a result, these lawyers have a fine-tuned sense of the latest trends in executive compensation, their clients' hot buttons, and which precedents set limits and which can be pushed.

Call them in, but don't call them agents. Although they dicker for dollars as much as any movie star's representative, they insist their knowledge makes them more than mere negotiators. "You tell me: What is the present value of a pension? What is the true value of a 100,000 share stock option?" asks Bachelder. "We are dealing with legal and economic issues that are quite complex. I certainly do not consider myself a business agent."