Two years after taking the helm, Michael Parker is out as president and chief executive officer at Dow Chemical Co. of Midland, Mich.
Parker was replaced Dec. 13 by William Stavropoulos, Dow's former president and CEO, who stepped down from those posts when Parker took over in November 2000.
Stavropoulos became chairman of Dow's board of directors at that time.
Stavropolous had been Dow's president from 1993-2000 and its CEO from 1995-2000. Parker will remain with the company as a board member.
Stavropoulos has been with Dow since 1967, while Parker joined the firm in 1968.
In a Dec. 13 news release, the board cited ``the disappointing financial performance of the company over the last eight quarters'' as a reason for the move. The board added that ``this year's results [are] expected to show no improvement,'' and also made clear that ``no concern of impropriety was reflected in the board's decision.''
Through September, Dow's 2002 sales were down more than 4 percent to $20.5 billion, compared with 2001. Its pretax profit was flat at about $1.2 billion.
Dow's plastics units - which accounted for about half of total sales through September - have struggled in 2002. Sales in plastics - including polyethylene, polypropylene and polystyrene - were down almost 6 percent to $4.8 billion. Sales in performance plastics - which covers more high-end, specialty materials - were off more than 4 percent to $5.4 billion.
Pretax operating profit in Performance plastics jumped 35 percent to $214 million in the first nine months of 2002, but plastics dropped almost 7 percent to $532 million in that same category.
Dow's per-share stock price also did not fare very well under Parker. It was around $32 when he took the position, but stood at $29.50 in early trading Dec. 13.
Industry consultant Balaji Singh said the move will be ``very positive'' for Dow.
``If you look at how [Dow] grew in the 1990s with aggressive management, that was under Stavropoulos,'' said Singh, president of Chemical Market Resources Inc. in Houston. ``He was more interested in returning shareholder value, while Parker was more interested in a slower approach to growth.''
Other industry contacts said that Parker's more gradual approach to growing the company might have worked if the economy had stayed stable. Instead, it started a slide that only was hastened by the terrorist attacks of Sept. 11.
Stavropoulos also did not hesitate to make tough decisions, according to one source.
``Bill wasn't afraid to cut people to achieve growth,'' the source said. ``[Parker] is more people-oriented and wanted to give [Dow's] markets time to recover after Sept. 11. But the stock market didn't look at it the same way.''
P.J. Juvekar, an analyst with brokerage firm Salomon Smith Barney in New York, agreed with the board's assessment that Dow has underperformed, pointing out that Dow ``has been slow to cut costs and dragged its feet'' on shutdowns at a pair of Texas plants - Seadrift and Texas City.
Juvekar added that part of Dow's underperformance has stemmed from its ``disastrous'' 2000 acquisition of Union Carbide Corp., which brought with it high-cost plants and asbestos exposure. Although Stavropoulos ``turned Dow around'' in the late 1990s, he also was the architect of the Carbide acquisition, Juvekar said.
Dow ranks as one of the world's largest makers of PE and PS, and also is a key PP producer as well as a major supplier of PVC feedstock vinyl chloride monomer.