Milchovich leaves Kaiser for another firm
Jack Hockema takes over as CEO
John Stucke - Staff writer
Raymond Milchovich resigned Thursday as chairman and chief executive officer of Kaiser Aluminum Corp. to join another company.
"This is a situation where you have a talented CEO recruited away by another company," said Kaiser spokesman Scott Lamb. "We were fortunate to have Ray in our company, and we are fortunate to have somebody like Jack Hockema taking over."
Hockema, an eight-year Kaiser executive, took over the CEO post Thursday and will conduct a third-quarter earnings briefing with Wall Street analysts next week amid a dismal aluminum market.
Kaiser brought George Haymaker back as chairman.
Lamb declined to name the company that hired Milchovich, 52, saying only that it was not another metals concern. Last year, Milchovich made $1.6 million in salary and bonuses.
Milchovich's 21-month tenure at the helm of Kaiser saw him take on the United Steelworkers of America during a protracted labor dispute, then navigate the company through a stormy feud with the federal Bonneville Power Administration.
He sat across the table during negotiations with Steelworkers and fielded critical inquiries about the company's business practices during annual meetings in Houston.
Kaiser is controlled by Maxxam Inc., a holding company run by controversial Houston financier Charles Hurwitz.
Milchovich began his Kaiser career in 1980 as operations manager of the Trentwood rolling mill in the Spokane Valley.
His company responsibilities grew during the 1980s and 1990s, overseeing the company's flat-rolled products division as a vice president.
In 1997, he became company president and served as chief operating officer.
In January 2000, he took over the CEO post from the retiring Haymaker as Kaiser plants were trying to operate with replacement workers while Steelworkers were locked out.
As the strike ended with Steelworkers losing hundreds of jobs, Milchovich then ordered the closure of Kaiser's smelter at Mead to sell electricity.
The soaring prices for power meant that Kaiser could net hundreds of millions of dollars by remarketing most of its Bonneville electricity allocation instead of making metal.
The move put union members out of work again. Most received about 70 percent of their wages due to labor contracts, but many others are receiving nothing.
Such actions, coupled with Kaiser's decision to keep the remarketing proceeds instead of sharing with BPA, set the stage for a lengthy fight with the agency over electricity contracts.
Wayne Bentz, head steward for Steelworkers Local 329, said the Mead work force saw Milchovich as exacerbating labor's problems with Hurwitz.
"I would say he took his lead from Hurwitz," Bentz said. "He was part of the problem."
Earlier this week, Milchovich oversaw a deal in which BPA waived its claim to any of the remarketing proceeds.
Regardless, Milchovich leaves at a time when Kaiser is struggling.
This week, Moody's bond rating agency downgraded the company and announced it was keeping the company under review.
When Milchovich took charge, he inherited a company nearly $1 billion in debt. Its stock was worth between $7 and $8 a share. On Thursday it closed at $3.20.
The problems continue. Aluminum prices are soft, the economy is weakening and Kaiser is facing asbestos litigation pegged at about $650 million.
Furthermore, Moody's said Kaiser must put together a comprehensive package to secure its short-term credit agreement that gives the company a comfortable level of operating cash. That can be done only if the company devises a plan to retire or refinance about $625 million in debt coming during the course of the next 17 months.
This is now Hockema's charge. Last year he earned $565,000. That included a $315,000 salary and a quarter-million-dollar bonus.
He first worked for Kaiser in 1977 at Trentwood. He left the company in 1982.
Before taking over as CEO, he was executive vice president.
"We are extremely pleased to have Jack assume the role of president and CEO in accordance with the company's existing management succession plan," Haymaker said.