Long considered a strong candidate to be the next CEO of Merck & Co., CFO Judy Lewent now finds herself in a tenuous position. Like Merck's stock price, Lewent's stock with the company's investors has plummeted since September 30, when the pharmaceutical giant pulled its arthritis drug Vioxx from the market. (The drug was found to increase the risk of heart attack.) Merck is now under criminal investigation for its handling of Vioxx, which British medical journal The Lancet says should have been withdrawn "several years earlier."
Although current chairman and CEO Raymond Gilmartin indicated after the Vioxx news broke that he would not retire before reaching the mandatory retirement age of 65 in March 2006, Merck has hired recruiter Heidrick & Struggles International Inc. to launch a CEO search. So where does that leave Lewent?
"She's clearly a competent executive," says Robert Hazlett, an analyst at SunTrust Robinson Humphrey. "The question is whether she has the confidence of the board." David Moskowitz of investment bank Friedman, Billings, Ramsey says the retention of a recruiting firm shows that Lewent's chances for a promotion are diminishing. "After Vioxx, many investors — and potentially the board — have lost confidence in the whole management team," he says.
Many of the firm's problems predate the Vioxx uproar, adds Moskowitz. "Merck has had to lower its guidance for several years in a row," he says. "In all cases, it did this after standing behind the guidance for most of the year, even when many on Wall Street were skeptical of the numbers."
John Wilson, president and CEO of executive-recruiting firm J.C. Wilson Associates in San Francisco, says Lewent may be fighting simply to keep her current job rather than contending for the CEO seat. With the board likely to choose an outside chief executive, says Wilson, a new finance head may be next. "New CEOs tend to bring in their own CFOs," he says. "And given the complexity and seriousness of the situation here, they might want to clear the decks."
Ultimately, Lewent may be grateful if she doesn't get the top job. In addition to the Vioxx troubles, Merck's next CEO will face a lackluster drug pipeline and the 2006 expiration of its patent on the cholesterol drug Zocor. "We're trying to see what's salvageable," says Moskowitz. —Kate O'Sullivan
CFO to the Rescue
Faster than a speeding invoice and able to jump through loopholes in a single bound, CFOs have saved the day on countless occasions. So it's about time they had their own action figure.
Just in time for the gift-giving season comes MoneyMan, from Toronto-based Happy Worker Inc. At around $17, the six-inch-high figure comes complete with the tools of the trade: paper shredder, piggy bank, and briefcase. (Hand-cuffs are sold separately.)
According to its creators, MoneyMan's super powers include money-making might and loophole creation. But like all superheroes, he has some vulnerabilities (take note, Eliot Spitzer). Social situations are his kryptonite, and irrational exuberance is his Achilles' heel. "We wanted to have a little fun with the stereotypes and poke some fun at them," says Kris Schantz, co-founder of Happy Worker. "But we are also trying to promote managers and financial executives. The idea is that everyone has super powers in their own way."
Happy Worker also makes GeekMan and BossMan figures for IT professionals and CEOs, respectively. Schantz says the company is capitalizing on a growing trend of workers keeping toys in their offices and cubicles. The company's Website, www.happyworker.com, lists the novelty stores where the figures can be found. —Joseph McCafferty
CFOs on the Move
Joseph Bronson has resigned as CFO at semiconductor-equipment maker Applied Materials. He will be replaced by Nancy Handel, a 19-year company veteran.... Cendant finance chief Ronald Nelson has added the title of president.... US Airways Group has named Ronald Stanley to the top finance post.... Caterpillar CFO F. Lynn McPheeters is stepping down. He will be replaced by corporate controller David Burritt.... Michael Bless has resigned as finance chief at data-storage company Maxtor Corp. after less than two months on the job.... Volkswagen of America has promoted CFO Frank Witter to replace Gerd Klauss, who is retiring as CEO.