When Leroy M. Ball was promoted to president and CEO of Koppers Inc. in January 2015, he says it was like standing on a burning platform.
Oil prices peaked in July 2014 and started a steady decline, but the global chemical and materials company acquired a new business for $500 million in August. Certain products were priced based upon the oil market, so a large chunk of profitability came out of the business as Koppers spent a bunch of money.
Ball had to deliver bad news to both shareholders and employees and face concerns whether the company would survive. The stock price peaked around at $50 a share in 2014; by February 2015, it was around $13 or $14 a share.
“In my first two months on the job, my first board meeting, I was basically recommending that we suspend our dividend,” he says. “So, I’m telling all our shareholders that this dividend that we’ve been paying every year since we went public in 2006, we’re not going to pay that, and I don’t know if and when we’re ever going to pay it again.”
Ball had to tell employees that the company was cutting its discretionary 401(k) contribution for the year.
It wasn’t pleasant and as a new incoming CEO, he says it didn’t make him employees’ favorite person.
He had to help employees understand the big picture: This is what we have to do today, but if we’re successful, the company will be healthier, and you’ll see the rewards along with that.
Ball says the critical part of building and maintaining that trust has been, as the company started to see bottom line improvements, delivering upon his promises.
Koppers’ business segments used to center around the global aluminum industry. Today, that segment has been de-emphasized. Instead, Koppers is focused on safely delivering customer-focused solutions that enhance and preserve wood, whether for railroad ties, utility poles or other applications.
Three years later, the balance sheet is in a much better condition, and 2017 should be the most profitable year ever.
“It’s been quite a turnaround, quite a success story,” Ball says, “and also near the end of last year, we hit our all-time closing high for our stock price at just over $51. So, we’ve seen success in just about every area, which has been pretty gratifying.”
Where the buck stops
Ball joined Koppers in 2010, but he’d spent the decade prior with Calgon Carbon Corp., working under CEO John Stanik. He’d seen similar issues at Calgon on a smaller scale, even though he wasn’t responsible for setting the culture as the chief financial officer.
“I’d say I have some experience in it, but it is different, you know — it’s different in the CEO chair than it is in the CFO chair, I can tell you that for sure,” he says.