CenturyLink has put its CEO transition plans in place, announcing that Level 3 CEO Jeff Storey will become CEO of the combined company after Glen Post retires in 2019.
Storey will become CenturyLink’s president and COO after the telco completes its acquisition of Level 3 Communications later this year and will then succeed Post as CEO of CenturyLink on Jan. 1, 2019. Post will then become executive chairman of the company's board of directors.
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"This leadership succession plan enables Glen to create a smooth transition of the CEO role to Jeff and to continue to have a significant role in the company's future as executive chairman of the board," said Harvey Perry, CenturyLink's new board chairman, in a statement.
The two companies said they are on track to close the deal by Sept. 30, 2017.
Transition on track
Post is a 40-year company veteran who began his career at CenturyLink’s predecessor company Century Telephone Enterprises in 1976. After serving in various executive positions, including VP and CFO, Post became CEO of CenturyLink in 1992 after Clark M. Williams Jr. stepped down.
Post will likely be remembered not only for his ability to drive organic growth but also for leading the purchases of Pacific Telecom, Embarq, Qwest, Savvis and now Level 3. These acquisitions helped transform CenturyLink from just another voice-centric telco into the third largest business and consumer services provider, trailing AT&T and Verizon.
Besides Storey, Post's direct reports following the closing of the acquisition will be:
- Stacey Goff, executive vice president, general counsel and chief administrative officer, who will oversee CenturyLink’s legal, compliance and ethics, public policy, regulatory, corporate strategy, corporate communications, investor relations, brand management and aviation functions.
- Sunit Patel, EVP and CFO, who will oversee the company’s financial measures.
- Scott Trezise, EVP of human resources, will continue to oversee all domestic and international human resources functions including compensation and benefits, employee and labor relations, leadership development, HRIS, HR policy, organizational effectiveness, payroll and talent acquisition.
The remaining members of the management team will report directly to Jeff Storey during the transition period:
- Dean Douglas, EVP of the company’s North America enterprise, who will be responsible for sales, revenue generation and enterprise service delivery.
- Gary Gauba, SVP and chief relationship officer, “who will be responsible for building strong, trust-based relationships with the C-suite executives of the company's top customers,” the company said in April. He will also lead CenturyLink’s advanced solutions group.
- Aamir Hussain, EVP and CTO, who will be charged with product development, platforms and infrastructure and information technology.
- Maxine Moreau, EVP of the company’s consumer business, who will be responsible for sales, marketing and service delivery.
Additionally, CenturyLink named Harvey Perry, vice chairman of the board of CenturyLink, as chairman of the board, effective immediately. He replaces William A. Owens, who retired from the board on May 24, 2017.
W. Bruce Hanks, a member of the CenturyLink board of directors, has been named vice chairman, also effective immediately. Storey is one of four Level 3 board members who will join the CenturyLink board at closing.
Strengthening enterprise position
Naming Storey as CenturyLink's next CEO makes sense, particularly as the company's revenue mix and focus will shift more toward providing business services. Storey also has plenty of experience in leading large organizations toward profitability in the business market segment.
After he took over Level 3's CEO reins from Jim Crowe in 2013, Storey oversaw a major company turnaround, particularly in the North America market. He pivoted the company's focus on developing new sets of data, cloud and security services for large multinational corporation customers.
Upon completing the Level 3 deal, CenturyLink will become the second largest enterprise services player behind only AT&T. Interestingly, Level 3 overtook Verizon as the second largest Ethernet provider on Vertical Systems Group's U.S. Ethernet Leaderboard following its acquisition of the telecom.
Analysts greeted the management transition as a positive development because it could enable the combined company to expand its fortunes in an environment that historically has seen longer sales and decision-making cycles.
Jennifer Fritzsche, senior analyst for Wells Fargo, said in a research note that "Storey could help position the new company to be better able to succeed in this challenging environment."
"At LVLT (and at WilTel Communications) Storey had success integrating acquisitions, developing deep sales teams, and identifying the key elements of corporations' communications infrastructure needs," Fritzsche said. "We view this news as a significant positive for CTL. While the cultures of CTL and LVLT are still quite different and integration will take time, we believe the addition of Storey as the CEO heir apparent will help make the integration a bit of an easier one."
Interestingly, Storey's pending appointment comes on the heels of a suggestion from activist shareholder Keith Meister. Meister, who is the founder of Corvex Management, told investors during the recent Ira Sohn conference that Storey would be a good candidate to lead the combined company. Corvex Management LP owns about 5.5% of CenturyLink.
"Execution has been substantially weaker at CenturyLink than at Level 3 for many years," Meister said at the conference, according to a Fox Business report. "Would you pay a premium to buy the New England Patriots and then not start Tom Brady?"