Time line points to UPS getting new leader

Bloomberg NewsMarch 29, 2013 

ATLANTA — Since founder Jim Casey left United Parcel Service in the 1960s after more than five decades in charge, the company's chief executive officers have served for an average of 51/2 years. Scott Davis reaches that milestone in June.

That means a leadership change is probably approaching at the world's largest package-delivery operator, said Kevin Sterling of BB&T Capital Markets and other analysts. A new CEO almost certainly will come from within, as have all the previous chiefs, Sterling said.

UPS is based in Atlanta but has a significant presence in Kentucky, particularly Louisville, home of its WorldPort global air hub.

Transitions since Casey's 1962 exit have earned UPS a reputation for stability in a situation yet to be faced by FedEx, which Fred Smith has led since starting the carrier in 1971.

UPS promoted Davis, 61, from chief financial officer, and current CFO Kurt Kuehn is the likeliest to succeed him, said Sterling and David Campbell of Thompson Davis & Co.

"They're always looking at candidates and everyone is cross-trained and they can do each other's jobs," said Jeff Sonnenfeld, a senior associate dean at the Yale University School of Management who has known every CEO at UPS since the 1970s. "This succession process started even before Scott was named CEO. And the same for the next CEO."

Davis has led UPS to a return of 21 percent since taking charge. That's compared with 9.5 percent at FedEx and 6.4 percent for the Standard & Poor's 500 Index. UPS stock has climbed 16 percent this year.

"At so many companies these days, succession has an element of crisis, but it never has at UPS and probably never will," said Sonnenfeld, based in New Haven, Conn.

Among the signals that the CEO is considering retirement is his inclusion on the past two earnings conference calls of executives whom analysts have identified as potential successors.

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