Joe B. Foster, the new chief — at least for now — of BakerHughes Inc., is promising improved performance to shareholders inthe wake of the disclosure of accounting irregularities that havelaunched a slew of investor lawsuits.
“Baker Hughes is a premier oilfield services firm. It hasoutstanding product lines, services, people and technology. Whileour customers have been pleased with our performance, we have notbeen satisfied with our performance in the stock market. We want toimprove value for the shareholders of Baker Hughes.” He said Bakeris not a candidate for sale or merger.
Foster departed the CEO position of Houston-based NewfieldExploration Co. two weeks ahead of a scheduled retirement to takethe helm of the troubled Baker until a permanent CEO can be found.The Baker board of directors voted to fire CEO Max L. Lukens, whohas been with the company nearly 20 years, including three aschairman and CEO. His firing was cheered in the stock market Mondayby an 18.3% jump in the price of Baker shares. The stock closedTuesday at $24.13, down $0.56.
Analysts responded to Lukens’ firing by raising their ratings onthe company. In a research note, one analyst said firing Lukens “isthe first and the biggest step the company needed to take to getthe market to recognize the value in its shares.”
Besides a foundering stock price, Baker has been beset byaccounting irregularities in its Inteq Group that are expected tocause the company to take a $40 million to $50 million charge (seeDaily GPI, Dec. 13). The trouble couldlead to the restatement of earnings for prior periods. Lukens is namedas a defendant in class actions filed against the company and oneother executive. Defendants are accused of making false statementsregarding the company’s finances.
The search committee charged with finding a new Baker CEO isbeing led by Victor G. Beghini, a Baker director since 1992.Members of the committee include Kinder Morgan Chief Richard Kinderand Dynegy CEO Chuck Watson.
Over at Newfield, David A. Trice CEO, Newfield president andchief operating officer since May, replaces Foster as CEO. Fosterwill remain Newfield’s chairman and be involved with the company ina non-executive role. Foster has been on the Baker board ofdirectors since 1990.
Foster founded Newfield in 1989 after serving as executive vicepresident of Tenneco Inc. and Chairman of Tenneco Oil. Foster isimmediate past chairman of the National Petroleum Council.
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