Morningstar | Adient Finds Its Operational CEO From the Outside in Doug DelGrosso
We are glad to see Adient's CEO search come to an end soon after former chairman and CEO Bruce McDonald left the company on June 11. We are not changing our fair value estimate on news that Doug DelGrosso, 56, will become president and CEO on Oct. 1 and join Adient's board, increasing the number of directors to eight. Interim CEO and director Fritz Henderson will remain on the board and become chairman, while interim chairman John Barth remains on the board. DelGrosso did not come cheap as his salary will be $1.15 million, with a cash bonus of up to 200% of his salary based on yet to be determined metrics by the compensation committee. He will also receive a onetime cash bonus of $1.3 million and long-term equity awards with a target value of $7 million to compensate him for forfeited compensation from his current role as CEO of aluminum and iron cast supplier Chassix, plus another equity award as part of normal annual compensation with a target value of $7.3 million. The value of these stock awards will depend on where Adient's stock trades at a later time.DelGrosso appears to meet Adient's needs of an executive with extensive operational and manufacturing experience, so we like the hire but specifics on his strategic vision are not known yet. Prior to Chassix he was president and CEO of automotive sealing company Henniges Automotive and spent five years at TRW running its global braking and suspension business. Most relevant to Adient's seating supplier role is DelGrosso spent 20 years at rival seating and electronics supplier Lear, including time as president and COO. He left Lear in 2007 and joined TRW late that year. We like the move as DelGrosso sounds like the operational leader Adient needs right now due to many execution problems in its structures and mechanisms business, and in the core seating segment. We continue to think the stock is very undervalued and its problems are fixable as outlined in our Aug. 17 Stock Strategist report on Morningstar.com.
Morningstar Select clients can read more about our thoughts on Adient's problems and its future potential in AVs and aerospace in our June 28 report, "Narrow-Moat Adient is Trading as if it Will Never Get Better."
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