Sherwin Williams (NYSE:SHW)
Historical Stock Chart
2 Months : From Oct 2019 to Dec 2019
By James R. Hagerty
Sherwin-Williams Co. slipped into the red in 1978 and stopped paying dividends for the first time in 93 years. The Cleveland-based paint maker, struggling to compete with discounters, was paying heavy costs to close its creakiest factories. The chief executive officer, Walter O. Spencer, resigned, saying: "The job is no longer any fun."
Such was the prelude to the 21-year reign of Jack Breen, recruited from Gould Inc. and installed as CEO in 1979. One of his first tasks was to fend off a corporate raider, Charles Bluhdorn of Gulf & Western Industries, who had acquired a 13.5% stake. Mr. Breen negotiated an agreement to buy back the shares for $21 million, and the takeover threat dissolved.
He swiftly hired new talent, replacing about half the top 110 executives in the first year, while setting up better incentive-pay plans, improving cash management and reducing debt. He expanded and smartened up the chain of Sherwin-Williams paint stores.
Sherwin-Williams resumed dividend payments in 1979 and produced higher earnings for 21 consecutive years, despite the failure of a diversification into drugstores. When Mr. Breen retired as chairman in 2000, annual sales topped $5 billion, up from $1.1 billion when he arrived.
Mr. Breen died Oct. 28 at age 85. He had been under treatment for a brain tumor.
Within a few days of becoming CEO, Mr. Breen paid a visit to Mr. Bluhdorn in New York. "I told him, 'I don't even know what the real book value of the Sherwin-Williams Co. is -- and you don't know, either. I'm not going to work for you. So, if you're going to take over the company, do it,'" he recalled in a 2010 interview with Crain's Cleveland Business. Mr. Bluhdorn decided to sell his stake, missing out on the company's recovery.
Mr. Breen concluded that the previous management had neglected the Sherwin-Williams store chain. He expanded the chain to 2,396 stores in 1999 from 1,400 in 1979. The stores were vital to attracting professional painters, more finicky about quality and less likely to buy on price alone.
He ended a sloppy practice of letting cash pile up in the stores; instead, it was deposited in banks daily to earn more interest. At the same time, he made the employee stock-purchase plan more generous.
There were a few missteps. In 1981, Sherwin-Williams acquired Gray Drug Fair Inc., an operator of drugstores. The idea was to tap into a higher-growth business and reduce the seasonal variation in earnings. But profits from the drugstores proved minimal, and Mr. Breen sold the chain in 1987. Some of the company's acquisitions in the late 1990s also proved disappointing, forcing the company to write down asset values and report a 95% drop in profit for 2000.
Christopher Connor, who succeeded Mr. Breen as CEO, remembered him for thorough reviews of divisional managers' strategic plans. "He would grill you on your thinking, your strategy and your plans -- is this the best you could do?" Mr. Connor said. "To be able to stand up to a Jack Breen review was a real badge of honor."
John Gerald Breen, always known as Jack, was born July 21, 1934, in Cleveland. He was the second of five children born to immigrants from Scotland who were of Irish descent. His father was a tool maker. His mother suffered a stroke that left her partially paralyzed at age 38. "She raised five kids with one hand," Mr. Breen told Crain's.
He earned a business degree from John Carroll University, a Jesuit school near Cleveland, in 1956 and later received an M.B.A. degree from what is now Case Western Reserve University. He met Mary Jane Brubach while she was in nursing school. They married in 1958.
Mr. Breen served in the U.S. Army Reserve, worked as an accountant and then joined Clevite Corp., where he was given responsibility for electrolytic copper foil, used in printed circuit boards. In the late 1960s, Clevite stationed him in England.
Mr. Breen became an executive of Chicago-based Gould when that company absorbed Clevite in 1969.
He ran marathons in his 40s and 50s, including one in New York.
Mr. Breen and his wife, Mary Jane, made major donations to the Achievement Centers for Children, a Cleveland nonprofit that helps people with disabilities, and to the nursing school at Ursuline College in Pepper Pike, Ohio, among other causes. Mr. Breen's younger daughter, Anne Tomolo, a medical doctor, donated a kidney to him in 2012.
He is survived by his wife, five children, nine grandchildren and a brother.
Mr. Breen supported Roman Catholic schools and was such a fan of Notre Dame's football team that he once called his son David from an airport in Botswana to check on the latest results.
Write to James R. Hagerty at firstname.lastname@example.org
(END) Dow Jones Newswires
November 08, 2019 10:44 ET (15:44 GMT)
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