A captain takes his leave: Lear's Rossiter turns over to like-minded storm survivor
Photo credit: Lear Corp.
DETROIT -- Next month, Lear Corp. CEO Bob Rossiter says goodbye to a company he mortgaged a home to finance, led through reorganization and grew to one of the largest automotive interiors suppliers in the world.
Rossiter, 65, spoke with pride about his successor, CFO Matt Simoncini, who takes over Sept. 1, in an interview last week with Crain's Detroit Business, an affiliate of Automotive News.
But he didn't veil the melancholy of leaving behind the company he spent 40 years building.
"I know the company is in great hands, but I don't know how I'm going to live my life without this company," he said. "Whether you believe it or not, I enjoyed coming to work here every day for 40 years. This was my love."
Success didn't come easy. Lear went public in 1994 and spent most of the decade on an acquisition binge, including one of the largest deals of its time, the 1999 $2.3 billion acquisition of UT Automotive Inc.
However, the acquisitions left Lear with a heavy debt burden when the industry began its downward spiral in 2007.
The debt combined with the declining economy led Rossiter to support a $2.9 billion, or $37.25 per share, bid by billionaire investor Carl Icahn to take the company private.
The price represented only a 4 percent premium, and some shareholders were skeptical of Rossiter's role in negotiating the deal, given that he and other company executives owned large blocks of stock that would have been cashed out in the sale.
"Myself, management, the board, we were all in tune," he said. "We saw the market was going to turn down," he said. "We thought it was a great deal for shareholders. They owned the company, so I never felt slighted, but when they opposed the deal, I was scared out of my wits."
The downturn took hold in 2008 and Lear's value fell by as much as 90 percent due to the collapsing pickup and SUV sales. The stock fell to $3 per share and the company filed Chapter 11 bankruptcy in July 2009.
However, Rossiter and his heir apparent, Simoncini, worked tirelessly to create a pre-packaged plan that was approved by Lear's customers, union and bondholders hours before a major bond payment was due.
"We worked around the clock," Simoncini told Crain's earlier this year. "At 1 a.m., we received the last commitment from our bondholders, putting us over 51 percent (approval). We knew with very little uncertainty that this was the watershed moment for our plan."
Rossiter said the management team's plan was so airtight it impressed the bankruptcy judge.
"He said it was the best-managed Chapter 11 he'd ever seen and that he's never seen a company as prepared," Rossiter said in a conference call discussing Simoncini's appointment last week. "I'm extremely proud this morning, but I cried that morning when the judge made those comments. I was so proud of what our team had accomplished."
At the time of the deal, Lear's stock was trading at around 40 cents. The pre-packaged reorganization converted $3 billion of debt into a combination of new debt, convertible stock and equity warrants.
"They (Lear management) handled bankruptcy extremely professionally," said Neil De Koker, president of the Original Equipment Suppliers Association. "They have a great team led by Bob and really thought of all the angles to minimize the pain and maximize the gain."
Shareholders were totally wiped out during the process, but Lear stock has since skyrocketed, trading a little above $46 per share as of Friday, Aug. 12.
Lear reported nearly $12 billion in revenue last year and expects to hit $20 billion within the next five years, Simoncini said.
Simoncini plans to stay the course set by his predecessor and continue expanding the supplier's footprint in emerging markets, he said.
"I can't think of any reason to change," he said. "Bob's done a nice job of setting up the company for the future, and we're prepared to continue on that path."
A true original
Rossiter was offered a job at the company, then called Lear Siegler Seating Corp., on June 18, 1971 -- a day more closely associated with his other love, his wife. The job offer came the morning of his wedding day.
Rossiter started the following Monday as a production scheduler.
He spent the next 17 years working his way off the plant floor and into the executive offices before he and 29 other executives leveraged a buyout of the company to create Lear Corp.
To finance the buyout, Rossiter and other members took out second mortgages on their homes and assumed great personal financial risk.
After the buyout, Rossiter became president and COO -- second in command to the man who hired him into the former company, Ken Way.
As he developed relationships with potential customers, Rossiter became known as "Mr. Outside" to industry insiders, while Way, who guided the company's growth, was known as "Mr. Inside." Rossiter ultimately succeeded Way as CEO after Way's retirement in 2000.
Throughout the 1990s, Rossiter, Way and longtime CFO Jim Vandenberghe grew Lear into one of the largest interior producers in the world through a series of acquisitions, including Automotive Industries Inc. (trim), Masland Corp. (carpeting) and UT Automotive.
The year Lear went public, in 1994, the company had revenue of $3.15 billion. When Rossiter took over as CEO six years later, the company had revenue of $14.07 billion.
Rossiter, who will help with the transition as an independent consultant until May, was the fifth-highest paid CEO in the auto industry in 2010, with total compensation of $14.7 million.
Along with Magna CEO Donald Walker and BorgWarner CEO Tim Manganello, Rossiter is one of the few remaining strong-willed leaders in the automotive industry, said Fred Hubacker, executive managing director at the Birmingham-based turnaround firm Conway Mackenzie Inc.
"Bob is a risk taker," he said. "We don't have a cadre of those kinds of leaders around anymore.
"Those guys (Rossiter, Way and Vandenberghe) were on the forefront of taking huge risks for huge rewards," he said.
De Koker said Rossiter's strength was cultivating young talent, citing James Kamsickas, CEO of International Automotive Components Group, as an example.
IAC was formed in 2007 via an acquisition of Lear's interiors systems division by billionaire investor Wilbur Ross. Kamsickas left Lear to run the new company at age 41.
Simoncini turns 51 in November.
"Bob is an original and had a unique ability of taking young guys and giving them opportunities well beyond their experience," he said. "The fact that he was willing to let these young people run billion-dollar operations with no proven experience says something about his ability to recognize talent and his strength."
Henry Wallace, chairman of Lear's board and former Ford Motor Co. executive, said Rossiter's departure leaves a hole, but that the board is confident in Simoncini's upbringing under the outgoing CEO.
"Bob's legacy is that he's fiercely loyal and protective of this team and the company he's built," he said. "Whatever comes down the road, we'll be able to build on that legacy because of Bob's work."
Rossiter scoffed at questions of heritage and how he'll be remembered.
"I don't know how to speak in terms of legacy, I don't believe in that," he said. "This great management team gets to prove itself now. I have great confidence in Simoncini, and if he keeps the continuity of the business the way Ken (Way) started this business, I'll be very happy."
Rossiter said he looks forward to spending his retirement making up for lost time with his wife.
He also serves on the board of directors for Business Leaders for Michigan and is chairing the corporate component of Detroit-based nonprofit Focus:Hope's $100 million capital campaign.
Joseph Lichterman of Automotive News contributed to this story.