CEO cites diversity in his leap from WE to B&W

| Thursday, April 5, 2012

James Ferland said he jumped at the chance to become CEO of Babcock & Wilcox Co. on the eve of taking the same job at Westinghouse Electric Co. because he was attracted by B&W's diverse businesses.

Outside experts speculated he also might have been swayed by a bigger raise in pay and the ability to run an independent, publicly owned company.

Instead of succeeding retiring Westinghouse CEO Aris Candris on Sunday as planned, Ferland surprised the board of the Cranberry-based nuclear power company on Saturday with the disclosure that he was resigning to become chief executive of B&W. That company announced Ferland as its new CEO on Wednesday.

"I've known B&W my entire working life and have long admired the company," Ferland said on a conference call yesterday with Wall Street analysts who follow the Charlotte-based company. It serves nuclear, fossil and renewable power and defense and technology markets.

"Westinghouse is a great company, and it's a very talented company for sure," Ferland said on the call. "But the opportunity to come to B&W with a great diversity in business lines here and the great tradition in history was one that I just couldn't pass up."

B&W has revenue of $2.67 billion last year and employs 12,700 employees, compared with Westinghouse's estimated annual revenue of $4 billion and 14,000 workers, including about 5,100 in Western Pennsylvania. Westinghouse supplies products and technology to about 60 percent of the U.S. nuclear power plant fleet.

Ferland, 45, succeeds Brandon Bethards, 64, who will step down as B&W's CEO on April 19. Soon to turn 65, Bethards told analysts, he wanted an "efficient and swift transition." He will remain an adviser until May 2013.

B&W competes with Westinghouse in some business lines. For instance, both are designing small modular nuclear reactors, a promising technology for remote consumers of power. They generate from 10 to 300 megawatts versus 1,000 or more for traditional rectors and could gradually replace fossil-fuel power plants whose owners must cut emissions.

B&W also supplies boilers fired by various fossil fuels or by renewable fuels, and designs and makes naval nuclear components and reactors. In addition, it supplies environmental equipment, components and services.

Westinghouse spokesman Scott Shaw said the Cranberry-based company is conducting an internal and external search for CEO and that Chief Operating Officer Ricardo Perez "is being considered a viable candidate." Shaw could not say how soon a selection would be made.

Westinghouse Chairman Shigenori Shiga, a veteran executive of Toshiba, the parent company, and a nuclear professional, will serve as interim CEO. A Toshiba spokesman could not be reached yesterday.

"It's rare at the CEO level where someone publicly takes the job, then moves on to another company," said John Challenger, CEO of Challenger Gray & Christmas of Chicago, an employment and outplacement research firm.

"They were obviously competing for him, probably in a bidding war, which happens with executives who are very specialized," said Challenger. "It sounds like Babcock & Wilcox probably came back with an offer that was a big jump."

Outgoing CEO Bethards received $6.8 million in total compensation last year, according to a securities filing. The amount included salary of $887,500 and about $3.7 million in stock and option awards.

B&W spokesman Jud Simmons declined to discuss the terms or timing of Ferland's hiring.

John Rogers, an analyst with D.A. Davidson & Co. of Portland, Ore., said Ferland might have preferred B&W over Westinghouse because the latter is owned and controlled by Toshiba.

"The appeal of Babcock & Wilcox is that it's an independent public company," said Rogers. "So you've got an opportunity to really run something."

Ferland, who had been president of Westinghouse's Americas region, could not be reached. It's not clear how much he would have made as Westinghouse's chief executive.

This is not the first time that Westinghouse and B&W have swapped nuclear power chiefs.

Fifteen years ago in March 1997, when Westinghouse Electric Corp. was an independent, publicly held company, it hired a B&W nuclear energy veteran to head Westinghouse's Energy Systems business. Charles "Charlie" Pryor Jr. continued as Westinghouse Electric Co.'s CEO until 2002, when he was transferred to British Nuclear Fuels Ltd., Westinghouse's parent company at the time.

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