The Loyal Company Man Says Goodbye

CEO Mark Could Have Been a Rock Star but Kept Focus on Colgate

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Think of package-goods CEOs, and the image of the reserved, dignified gent, head thick with silvery hair, towering above rivals literally, figuratively and certainly in the media -- and preferably all three -- is bound to pop up. Former Gillette Co. CEO Jim Kilts and Procter & Gamble Co. CEO A.G. Lafley come to mind.
Reuben Mark

In his 44 years at Colgate, Reuben Mark has never sold a single share of his company's stock; he will retire with a stockpile nearing $500 million.

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Then there's Colgate-Palmolive Co. CEO Reuben Mark -- diminutive, bald, occasionally ponytailed, and known to sometimes ride his motorcycle, sans helmet, around Greenwich. He's prone to wisecracks, perhaps unadvisedly so, at times. He's even been known to drop the occasional f-bomb on an analyst or two who downgraded his stock, though he remains widely loved by investors. And he's assiduously avoided profiles or personal publicity throughout his 23 years at the top of Colgate, though his quick wit and solid business results easily could have made him a rock-star CEO.

And, oh yeah, he's been beating those other guys on the one metric that counts most -- stock appreciation -- fairly handily.

But because of his reticence with the media, both the company he heads and the massive two-act turnaround he's accomplished have been among the more overlooked marketing success stories of the past quarter century.

Master strategist
Like the tip of an iceberg, only about a fifth of Colgate's business pops above the surface, at least in the U.S. Colgate gets 21% of its sales from North America, not counting the pet-food business it reports separately. But the company gets far more of its business from developing markets than from the U.S., turning the usual industry ratios on their heads. For example, it gets 25% of sales from Latin America, where it is far more of an iconic household name than it's ever been in its home country.

Colgate today is a far cry from the company Mr. Mark took over in 1984. Then, it was a heavily U.S.-focused player getting clobbered by P&G. Its stock languished as it dabbled in such businesses as golf courses, Wilson Sporting Goods and Helena Rubenstein cosmetics.

The Colgate Mr. Mark will leave to his successor, Ian Cook, when he retires July 1 has seen its stock price grow at more than double the pace of P&G's in the past two decades. It's beaten most other rivals by far more.

Mr. Mark has accomplished that feat, on a much smaller scale, like a couple of other great strategists of the 20th century -- Mao and Sam Walton -- by building his base in outlying regions, then using that base as a springboard to dominance.

Big hand overseas
Today, Colgate toothpaste has a north-of-80% share in some Latin American markets, such as Mexico, compared to around 35% in the U.S. Mr. Mark, who spent some of his early career in Venezuela, learned to speak Spanish fluently and made Latin America a priority. While Colgate is a relatively minor player in U.S. advertising, it spends the bulk of its ad money in overseas markets.

Colgate's story may have gone relatively unnoticed in the media, but it certainly never escaped attention of its rivals. Mr. Mark twice turned down overtures to merge with rival Gillette Co. -- once in 2002 and again two years later. After the second time, Gillette's Mr. Kilts sold his company to P&G's Mr. Lafley. Both repeatedly termed the combination "the best consumer-products company in the world."

So it's no small frustration for some at P&G -- and some former Gillette executives holding big piles of P&G stock -- that the market sees things differently, at least for now. Colgate today holds a 20%-plus premium in earnings per share over a combined rival more than six times its size.

It's all giving Mr. Mark -- perhaps the most passionately loyal company man -- a last laugh on his way out the door. He's never sold a single share of Colgate stock in his 44-year career at the company he joined in 1963, amassing a stockpile nearing $500 million. According to one person close to the company, he watches the stock price so closely that he can tell when a different specialist is working the floor at the New York Stock Exchange because of the change in trading patterns.

Waiting for the right moment
Some close to the company thought Mr. Mark, now 67, would retire last year on the company's 200th anniversary. But the stock then was still within the trading range it had been stuck in since the turn of the millennium. It's no coincidence that he finally set a retirement date last week, after announcing his intentions a year earlier, only after the stock broke through the stubborn $60 threshold late last year and stayed there, regularly setting all-time highs.

But the same pugnacious style that helped Mr. Mark conquer much of the world's oral-care market also helped make competition a bit tougher. Mr. Mark's wisecracks, which never failed to enliven investor conferences, also roused some competitive ire.

After P&G issued its first and only quarterly earnings shortfall under Mr. Lafley in 2001, blaming depreciation of Turkish currency, Mr. Mark cracked at a conference, "If you don't hear about [a country] from us on the way up, you also won't hear about it on the way down."

On April 24, responding to a question on a conference call about a competitor who said ad spending as a percent of sales isn't the right metric to watch, Mr. Mark said: "I don't know what competitor you're talking about. I'm sure they are very formidable. But nonetheless, just think if you are able to increase the advertising effectiveness at the same time you're increasing the absolute amount of advertising. Wouldn't that be great?"

P&G executives, have, of course, on several occasions in recent months, indicated ad spending as a percent of sales isn't the right measure to watch, as the company has trimmed ad spending as a percent of sales slightly in recent years.

Thwarting the competition
It may be no coincidence P&G has put considerable spending toward unseating Colgate and Mr. Mark from the oral-care throne. Crest alone has outspent all Colgate brands on advertising by more than 2 to 1 for years in the U.S. Mr. Lafley has declined to take the verbal bait, even when following Mr. Mark's warm-up act at conferences. At one, he said: "It's hot in here. But it's cooling off now."

That Mr. Mark is leaving some enormous shoes for his successor to fill is, of course, both a credit to him and a problem for Mr. Cook, described by some as a highly competent manager who lacks Mr. Mark's charisma.

One insider indicated Mr. Mark, even though he's sticking around as chairman through 2008, has made it clear Mr. Cook will be in charge -- and that he has no plans to sell any of his stock, even with the new guy in charge.

But people close to the company also say Mr. Mark already has stepped back from much of the day-to-day decision making and virtually all of the travel in the past two years, giving Mr. Cook nearly full run of the company.

One insider indicated Mr. Mark, even though he's sticking around as chairman through 2008, has made it clear Mr. Cook will be in charge -- and that he has no plans to sell any of his stock, even with the new guy in charge.

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The Many Sides of Reuben Mark

"I think you would be hard-pressed to find a CEO of his talent who has a stronger sense of inherent decency and humanity. Of course, he has one of the best track records ever in the history of American business in terms of turning a foundering company -- even with some incredible underlying strengths that he and I and a few others knew existed -- into a best-of-class 'academy' company. ... That takes an ability to manipulate people and juggle egos, and he's a master at both. But he does it with such skill and grace that it takes most people years to realize they have been manipulated. Make no mistake, he's got a temper that's quick to explode, and he can be as tough and hardnosed as any CEO on earth when called for. But ... he is considered very dear, even loved, by most of the Colgate family, including myself."
-- Michael Hoye, former exec VP-North America at Colgate-Palmolive, now CEO of North American consumer products

"It's such a multicultural company with so many different languages, and one reason he succeeded was by keeping things very, very simple. And that's part of the reason Wall Street loves him. ... He feels things very deeply. But he's very fair. And he's a big supporter of the underdog. ... I think it shows his loyalty to the company that he's never sold a single share of stock."
-- William Shmitz, analyst, Deutsche Bank

"A CEO, to be successful, has to live within his own skin. You don't suddenly become Donald Trump. ... He lived within his personality range, and probably because of that he was a more successful CEO than if he was trying to seek out every TV talk show and magazine cover. Even though I'm in the publicity business, I've got to say that sometimes hanging back works for you. ... If you let your ego dominate you, after a while you look for [publicity], and it's like an addiction. You take anything."
-- PR legend Howard Rubenstein
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