Douglas McGregor, chairman and chief executive officer of leading plastics compounder and distributor M.A. Hanna Co., on Oct. 8 announced his retirement and resignation as a director.
Both actions are effective immediately.
The company has struggled to right itself in a year in which its stock price has dropped more than 50 percent.
``I feel that it is appropriate that new leadership be allowed to take the company to the next level of performance,'' McGregor said in a news release. ``I am proud of what has been accomplished and feel it is time for me to step down and move into some personal endeavors.''
McGregor, who was unavailable for comment, assumed the top spot in July 1997 at the Cleveland firm, which he joined in 1988 from Rockwell International. His departure comes less than four months after Hanna announced plans to cut 4 percent of its work force through a series of cutbacks that include closing five colorant plants by mid-1999.
Former Hanna Chairman and CEO Martin Walker, 66, is replacing McGregor, 57, on an interim basis. Walker, who retired in June 1997 after 11 years as Hanna chief, is credited largely with transforming Hanna's business focus from coal-based operations to plastics compounding and distribution.
Hanna expects its 1998 profit to be 20-25 percent below the 1997 mark of $64.6 million. The company reported record sales last year of $2.2 billion.
In a Sept. 10 news release, Hanna officials said the firm's domestic colorants business was hurt by the General Motors Corp. strike and reduced demand in general products. Colorant volume also has been affected by market demands for more highly concentrated materials.
Several industry analysts have pointed out that Hanna may be experiencing problems in absorbing its many acquisitions. The company has made 25 purchases in the last 12 years.
Many specialty chemical companies, including such Hanna peers as Ferro Corp. of Cleveland and A. Schulman Inc. of Fairlawn, Ohio, have seen their stock prices suffer this year. In Hanna's case, its stock price stood at just below $12.50 per share Oct. 8 after starting the year at $25.25.
Initial market reaction to McGregor's move seemed favorable. Hanna's stock rose almost 6.5 percent Oct. 8, even though the Dow Jones industrial average slipped 0.1 percent.
When asked about the connection between Hanna's stock value and McGregor's performance, a Hanna spokeswoman said McGregor ``has been very focused on the performance of the company and what impact that's had on stock price.''
``[McGregor] saw [the retirement] as being in the best interests of all parties,'' the spokeswoman said.
Tim Gerdeman, a stock analyst with Salomon Smith Barney Inc. in Chicago, pointed out that McGregor is the third top specialty chemicals executive to resign in the past three weeks, joining officials from Praxair Inc. and Cytec Industries.
``In each instance, those companies' stock had fallen precipitously year-to-date,'' Gerdeman said in an Oct. 9 telephone interview. ``The industry is pretty conservative. You rarely see resignations, and now we've seen three in three weeks.
``You have to stand back and ask yourself if boards are getting more proactive at how they look at senior management and the financial underperformance of these companies,'' he added.
Saul Ludwig, a stock analyst with McDonald & Co. in Cleveland, said Hanna should fare well in the short-term with Walker returning. Ludwig added that he hopes the market will be fair in assessing McGregor.
``[Walker] grew Hanna to what it is today, but [McGregor] was his right-hand man and contributed to a lot of that success,'' Ludwig said. ``I don't know how people will look at or judge McGregor, but running a company isn't a one-man show.''
Hanna ranks as North America's third-largest plastics compounder with 5-6 percent of an $8.7 billion annual market, according to industry estimates. Within the compounding market, Hanna leads color compound and concentrate makers with 11 percent of that segment.
In North American resin distribution, Hanna ranks third, trailing Ashland Chemical Co.'s General Polymers unit and GE Plastics' Polymerland division, according to industry estimates.