Owens-Illinois CEO hints at retirement

Major glass container supplier Owens-Illinois Inc could be in for a change at the top.
Joseph Lemieux, the 72-year-old chairman and chief executive, told shareholders on 15 May 2003 that he is contem…

Major glass container supplier Owens-Illinois Inc could be in for a change at the top. Joseph Lemieux, the 72-year-old chairman and chief executive, told shareholders on 15 May 2003 that he is contemplating retirement. “My time is close to being up,” he said during the annual shareholders“ meeting. “I“ve got to wind things down. I“ve been here a long time.” Responding to a question after the meeting, he declined to give a timetable for his possible departure. The firm, which is celebrating its centenary in 2003, sells USD 5.6 billion in glass and plastic containers annually. Fifty percent of glass bottles worldwide are made by the company, an affiliate or a licensee. With the firm“s share price going up with progress towards a legislative settlement of the asbestos liability crisis that kept investors away from O-I and other former producers, a change in CEOs could be one of several important changes at the company. The dominance of New York investment firm Kohlberg Kravis Roberts & Co. LP would probably end. The firm, which bought O-I in a leveraged buyout in 1987 and holds four of 10 seats on the board of directors, has been looking for a buyer for its remaining 24% stake in the company. KKR officials have had discussions with at least three possible buyers of their 36 million O-I shares in recent years, Mr. Lemieux said. The CEO was involved with one group that negotiated with the investment firm. Within the past six months, another promising deal looked in prospect. But each time, discussions came to nothing because KKR officials were dissatisfied with the price offered for the stock. In recent weeks, the share price has been rising on hopes of a US Senate-brokered deal to set up a trust fund to pay out on asbestos claims. As reported on GlassOnline on 9 May 2003, the fund would be financed by O-I and other former asbestos producers and would take asbestos related claims against companies out of the courts. O-I shares closed at USD 11.03 on 14 May 2003, after going below USD 8 on 12 March 2003 in trading on NYSE. Negotiations over the fund are reported to be going well, but no bill has been introduced in Congress. Mr. Lemieux said other possible solutions to corporate America“s asbestos liability crisis have failed to materialize, but the current discussions are the most promising he has seen in a decade. O-I has paid USD 1.5 billion to settle claims, most of it to lawyers and clients who were not actually sick but merely presented evidence that they had inhaled asbestos fibers, Mr. Lemieux said. O-I pays about USD 220 million per annum to resolve asbestos claims. With a resolution to the problem, O-I could divert this money into a strategy of buying glass plants around the world so it could become one of the few survivors in a declining industry which nonetheless makes a product for which demand remains. Commenting on expectations for 2003, Mr. Lemieux said the firm“s profit picture will probably improve in the second half of 2003. Sales and profit were lower than expected in the 1Q 2003 as a result of factors including an unanticipated drop in U.S. beer sales. The company made USD 34 million, or USD 0.20 a share. Analysts originally expected USD 0.29 a share. Some analysts blamed the drop on the war in Iraq. Sales improved in April 2003, and continued improvements are forecast, the CEO added.