"The clothes are great, but the governance isn't," writes New York Times DealBook Editor Andrew Ross Sorkin of how the planned buyout of J. Crew is being handled by management and the board. Sorkin's verdict came in his Jan. 3 column devoted to "roasting and toasting" the deal makers of 2010.
Questions abound about CEO Mickey Drexler's influence in driving the deal, especially his seemingly tardy timing in bringing the board into the loop on the discussions he was having with backers to take the company private.
I note that Josh Weston is on the J. Crew board and is a member of the special committee overseeing the deal process. Weston is a former chairman and CEO of ADP Inc. and a veteran public company director. (Before joining ADP in 1970 he was No. 2 at J. Crew.) I was in attendance when he was given an "Outstanding Director" award by the ODX organization in 2006.
He is a past Directors & Boards author. In 1998 I published his article, "A Formula for Prosperity," in which he offered up "10 principles that I have learned that have been most relevant and helpful to me as CEO of a team that achieved [as of that date] 146 consecutive growth quarters." A remarkable record for a remarkable company.
One of his 10 principles always particularly resonated with me, and I think of it again in connection with the J. Crew deal. It was his Principle N0. 9: "The ADP Math Adds Up." Here is what he means:
At ADP, 39 plus 1 equals more than 40 plus 0. What do I mean? Forty plus zero represents the very, very busy person who's got a loaded in-basket while the phone is ringing every 15 seconds. In his 40-hour week, he's busy dealing with all of this stuff, with zero time to think about what he's doing and how he's doing it. A 39-plus-1 person has the same in-basket and phone problem. Nonetheless, he will take one of his 40 hours to think about improving or even eliminating some of what he's doing. A 39-plus-1 person will get a lot more done than a 40-plus-0 person.
I can't imagine that Josh Weston is a happy camper that J. Crew's governance is the butt of an Andrew Ross Sorkin slapdown. Knowing a little bit about him, his track record as an engaged director, and his "formula for prosperity," I think the chances are fairly strong that there will be some Weston math happening in sewing up a deal at J. Crew that will wear well for management and shareholders.
Photo of Josh Weston at time of his article's publication in 1998.