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Case | HBS Case Collection | November 1996

Del Webb Corporation (A), The

by Jay W. Lorsch and Samanta Graff

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Abstract

Begins with a company history, tracing the tenures of founder Del E. Webb and his successor as chairman and CEO, Robert H. Johnson. Johnson inherited a diversified company that was involved in construction, real estate development (including the famous Sun City), and the hotel-casino business. Johnson left Del Webb near bankruptcy in 1981, and renowned turnaround artist Robert K. Swanson was brought in to rescue the company. Describes Swanson's turnaround scheme and proceeds to highlight the misgivings of several corporate managers toward Swanson's managerial style, boardroom appointment, and strategic plans. When CFO Phil Dion was promoted to president and nominated to the board in 1987, he began to challenge Swanson aggressively. The board, which comprised many of Swanson's close friends and business colleagues, was supportive of Swanson. In the fall of 1987, crisis hit. The company was forced to take a close to $100 million write-down, the stock price took a dive, and Swanson and three board members resigned. The remaining board members were left with a faltering company and no succession plan.

Keywords: Management Style; Conflict Management; Governing and Advisory Boards; Management Succession; Crisis Management;

Format: Print 20 pages Find at Harvard

Citation:

Lorsch, Jay W., and Samanta Graff. "Del Webb Corporation (A), The." Harvard Business School Case 497-016, November 1996.

Related Work

  1. Case | HBS Case Collection | November 1996

    Del Webb Corporation (B), The

    Jay W. Lorsch and Samanta Graff

    On November 16, 1987, the Del Webb board appointed Phil Dion chairman and CEO. This case outlines the development and implementation of a strategy to focus exclusively on real estate development and to liquidate all other assets. Discusses the appointment of two new board members to fill the slots vacated by the directors who followed Swanson out the door. Proceeds to describe the activities of two investors: Ronald Brierly of Industrial Equity Pacific and James Cotter of Webcott Holdings. Independently of one another, these investors had each purchased over 9% of Del Webb stock at a premium just before the stock price plummeted in the fall of 1987. These investors laid low for over a year, waiting to see if the descent in the stock price had been a temporary blip or a sustaining trend. When they concluded it was the latter, each investor approached Dion with the request that he be allowed to put a representative on the Del Webb board.

    Keywords: Crisis Management; Management Succession; Strategic Planning; Governing and Advisory Boards; Business and Shareholder Relations; Conflict of Interests; Real Estate Industry;

    Citation:

    Lorsch, Jay W., and Samanta Graff. "Del Webb Corporation (B), The." Harvard Business School Case 497-017, November 1996.  View Details
    CiteView DetailsEducatorsPurchase Related
  2. Case | HBS Case Collection | November 1996

    Del Webb Corporation (C), The

    Jay W. Lorsch and Samanta Graff

    Dion and the other Del Webb directors were open to having Industrial Equity Pacific (IEP) and Webcott Holdings representation on the board. The IEP representative was perceived as reserved and lacking in sophistication. Cotter of Webcott, however, struck the directors as savvy but antagonistic and disruptive. Cotter's goal was to position the company as a possible takeover target, and he agitated in the boardroom for changes that he felt would open up the company to potential acquirers. He also launched a proxy battle in an attempt to eliminate Dion's golden parachute and the company's poison pill.

    Keywords: Crisis Management; Management Succession; Strategic Planning; Governing and Advisory Boards; Horizontal Integration; Conflict Management;

    Citation:

    Lorsch, Jay W., and Samanta Graff. "Del Webb Corporation (C), The." Harvard Business School Case 497-019, November 1996.  View Details
    CiteView DetailsEducatorsPurchase Related

About the Author

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Jay W. Lorsch
Louis E. Kirstein Professor of Human Relations
Organizational Behavior

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More from the Author

  • Case | HBS Case Collection | March 2018

    A Nonprofit Board in Transition at Farrington Nature Linc

    Jay Lorsch and Emily Irving

    Citation:

    Lorsch, Jay, and Emily Irving. "A Nonprofit Board in Transition at Farrington Nature Linc." Harvard Business School Case 418-066, March 2018.  View Details
    CiteView DetailsEducators Related
  • Case | HBS Case Collection | June 2017 (Revised October 2017)

    Uber in 2017: One Bumpy Ride

    Suraj Srinivasan, Jay W. Lorsch and Quinn Pitcher

    Uber Technologies Inc., the popular ride-hailing company, entered 2017 having doubled its bookings in 2016 and achieving a valuation of nearly $70 billion, making it the largest venture capital-backed company in the world. Co-founder and CEO Travis Kalanick embodied the company, with a hard-charging attitude embedded in the company’s workplace culture that allowed it to successfully take on the entrenched taxi industry. Uber looked to enjoy another year of global growth in 2017, until lawsuits and a cascading series of scandals surrounding that same workplace culture led a group of powerful investors to seek Kalanick’s resignation to protect their investment. This case presents an overview of the growth of Uber, the impact of Kalanick, and the role that Uber’s board of directors had in shaping the company’s growth. It centers on the factors leading to Uber board members and investors to call for Kalanick’s resignation, focusing on how board oversight can help shape company culture and how entrepreneurial boards deal with founder CEOs. It then deals with the events that happened in the aftermath of Kalanick's resignation, including the appointment of Dara Khosrowshahi as CEO and the changes, the lawsuit brought against Kalanick by venture capital firm Benchmark Capital, and the governance changes proposed at the end of September 2017.

    Keywords: Governance; Technology; Transportation; Venture Capital; Organizational Culture; Technology Industry; Transportation Industry; United States;

    Citation:

    Srinivasan, Suraj, Jay W. Lorsch, and Quinn Pitcher. "Uber in 2017: One Bumpy Ride." Harvard Business School Case 117-070, June 2017. (Revised October 2017.)  View Details
    CiteView DetailsEducatorsPurchase Related
  • Article | Annals of Corporate Governance

    Understanding Boards of Directors: A Systems Perspective

    Jay W. Lorsch

    In this essay, my goal is to explore why, despite the tireless efforts of talented people, research on corporate governance has been slow and uneven, and where that research should turn to next to be most valuable to practitioners. My belief is that the most fruitful work thus far has recognized that corporate boards are dynamic social systems, has identified all the forces that shape those systems, and has acknowledged that boards should seek to represent a wide variety of stakeholders, not just shareholders. The best way for me to establish this argument is to trace the history of research on corporate boards and analyze the trends in that research, including the relative value of the types of data that researchers in this field have used. Ultimately, I identify what I consider to be the best path forward in studying these complex social systems. I have made a deliberate choice to focus primarily on research that reflects firsthand experience with boards rather than on research that utilizes data derived from questionnaires and other secondary sources. Not everyone will agree with my choices, but my hope is that my perspective will nonetheless provide some guidance for people working in this evolving field to understand the true complexity of corporate boards.

    Keywords: corporate governance; corporate boards; business admnistration; social systems; Corporate Governance; Governing and Advisory Boards; System;

    Citation:

    Lorsch, Jay W. "Understanding Boards of Directors: A Systems Perspective." Annals of Corporate Governance 2, no. 1 (February 2017): 1–49.  View Details
    CiteView DetailsPurchase Related
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