Gallois Named Sole CEO Of Consortium In Exec Shuffle

They said a change was gonna come... and even that change has changed. Management and shareholders at EADS decided this week to modify the company's current management and leadership structure.

Under the simplified management structure, EADS will be led by a Chairman and a single Chief Executive Officer, the company announced Monday.

In a 180-degree shift from previous reports, Frenchman Louis Gallois is now sole CEO of EADS. Thomas Enders, formerly the German co-CEO of the aerospace consortium, has taken the position of CEO of Airbus in the Toulouse headquarters of the company, the fifth person in two years to do so. Many thought Enders would get the nod to stay at EADS, with Gallois continuing to run the show at the planemaker.

Rüdiger Grube will assume the position of Chairman of the EADS Board of Directors. In this role, he will be responsible for overseeing the Group's strategic development and dealings with its shareholders. In particular, he will chair the newly created EADS strategic committee.

The shareholders also concluded it is in the best interest of the Group to recommend an increase in the number of independent members on the Board of Directors to appropriately reflect the global profile of the company. As part of this proposal both DaimlerChrysler and French holding company, Sogeade, will each relinquish two seats on the Board of Directors.

The Board will propose at the next shareholders meeting the election of four independent directors, who will join the Chairman, the CEO, two representatives from DaimlerChrysler, two representatives from Sogeade and one representative from SEPI.

Apart from the CEO, the Board will no longer be comprised of executive directors, according to Bloomberg.

The EADS CEO, and his Executive Committee, will have more leeway in the day-to-day management of the company. For example, investments valued at less than about $482 million will be its responsibility, as will the appointment of the management teams of EADS' main subsidiaries and business units, except for the Airbus CEO and EADS Executive Committee. Those appointments will be decided by the EADS CEO, Chairman and Board.

The Board's decisions will be taken on a simple majority vote, except for a limited list of reserved matters (including appointment of Chairman, EADS CEO and Airbus CEO and major strategic or investment decisions), which will require approval by Sogeade and DaimlerChrysler directors.

The management appointments at EADS will adhere to the principles of the "best man for the job" while at the same time maintaining the balance and diversity of the Group. The company says these modifications will reinforce the efficiency of the Group and contribute to strengthening its position as a global leader of the aeronautics and defense industry.

The modifications will be fully implemented and become effective from an EADS shareholders' general meeting to take place around August or September, Gallois said.

For the past seven years, the dual-headed management structure with two Co-Chairmen and two co-CEOs has provided what the company says was the necessary balance and stability required by a company with such a unique industrial heritage. However, the shareholders and EADS' leadership concluded a simplified management structure is now more appropriate to provide the unified leadership needed for the next phase of the Group's development.

But, the new roles don't look like they're matched to each executive's strengths, said Richard Aboulafia, vice president of Teal Group, a Fairfax, VA-based consulting company.

"They're the right men in the reverse jobs," he said. "Enders seemed ideal for EADS, because he has the broad business and defense background, and Gallois (above) has a history of reforming French institutions, and more of a commercial aerospace background."

"I don't think it'll solve anything: It's the same names all over again, and they're just shifting the cards around," Jean Francois Knepper, president of Airbus's European works council, agreed.

We'll see.

FMI: www.eads.com