Every year there’s some churn in leadership among the top defense companies. People retire. Acquisitions bring shifts at the top. Scandals happen.
But among the standout findings from our Top 100 list this year was the number of execs that have moved on. More than a dozen of the CEOs in the list this year are new to the role. That doesn’t even count those that announced pending retirements – including the most recent from L3 CEO Mike Strianese. It also doesn’t consider powerful leaders of divisions, like Ellen Lord or Patrick Shanahan, plucked by the Pentagon from Textron Systems and Boeing respectfully.
So what’s happening?
Some of this is the result of that standard churn. George Krivo was promoted to the helm at DynCorp after his predecessor, Lou Von Thaer, opted to accept an offer to lead Battelle come October, when Jeff Wadsworth retires. This continues an ongoing struggle at DynCorp to hold on to top leadership amid challenging times, and it also spotlights the reality that defense contracting — while a massive sector — is actually pretty exclusive when it comes to the pool of executives that find themselves leading these companies.
There are also factors that influence international players more than U.S. Some state-owned or state-controlled companies, Turkish Aerospace Industries for one, saw CEOs swapped. Not terribly unusual. And then there’s Leonardo – a company that has had some public relations challenges to overcome under Mauro Moretti and perhaps felt changes were in order.
These are all natural shifts. What we’re not seeing much in this list are changes at the top spurred by panic by the board of directors, or a perceived need to rethink strategy. We did see that a few years ago when sequestration brought that so-called age of austerity and need to slash overhead – a skill that didn’t necessarily come naturally among some executives, particularly in the IT services sector. The result was a string of leadership changes where the old guard, so to speak, moved on, and new executives were brought in to take a scalpel to costs.
That age of austerity also led to a whole lot of mergers and acquisitions, which of course brought a melding of leadership teams and changing of the guard so to speak. And soon after we saw corporate splits and divestitures. IT giants split in two to eliminate the conflicts of interest that before prevented them from bidding on certain opportunities (think SAIC). And the bigger players shed the portions of the business that brought slim margins (think Lockheed Martin selling its IT business to Leidos).
Interestingly, some of the recent shifts more seem to be a sign of stability, rather than the recovery efforts of years past. The departure of market mainstays like L3’s Strianese and Ian King at BAE Systems, as counter intuitive as it may seem, sends a message of stability. Both tout decades in the industry and roughly 10 years leading two of the largest defense companies on the planet. Neither is leaving because of performance issues. And neither would step down if the market was in a state of uncertainty, leaving the companies vulnerable. They are ready to pass their batons, so to speak, because they can confidently say they’re leaving the companies during stable times.
The market leaves most cautiously optimistic at best. But combined with the fact that sales among our Top 100 saw the first increase in the last five years, this all seems a good sign.