MONEY

Ursula Burns won't be CEO after Xerox split

Brian Sharp
@SharpRoc
Xerox Corp. CEO Ursula Burns

Xerox Corp.’s split into two companies later this year will leave CEO Ursula Burns as board chairwoman of resulting document technology company, which has the majority of its operations in Rochester.

However, it appears that there will be new chief executive officers of both that company and the business processing outsourcing company that also will be formed.

"This reflected my focus on a strategy that was best for Xerox," Burns said during Xerox's annual shareholders meeting, the last as a unified Xerox.

The company, based in Connecticut but founded in Rochester, announced back in January that it would split into two independent and publicly traded companies, one focusing on business processing outsourcing work and the other on its legacy document technology business. Burns will remain in her role as chair and CEO of Xerox until the split. She said CEO searches for both companies are ongoing.

The leadership change was expected, given the company's reorganization.

"The company has had some challenges. They have had, obviously, some shareholder concerns, and they are changing directions," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. "She was, for a long time, identified with that (original) direction."

For Elson, the more interesting question is how long Burns retains a board leadership role: "Is that permanent? Will she become an executive chair, or is it something that is more honorific or temporary?"

Burns, who began her career at Xerox as an intern, has been CEO of the company since 2009, when she replaced Anne Mulcahy. She is a 35-year veteran of the company. She is the first and only African-American female CEO of a Fortune 500 company. Though not speaking about the personal significance of her changing role, Burns noted the final shareholders meeting was "an important inflection point."

"A little bit of a sad day for me," she said, "but a happy day as well."

The two companies that emerge from the Xerox split are equally attractive and challenging for what should be a large field of potential candidates, Elson said. And that field is more diverse today in both race and gender, at least in comparison to 2009. Said Elson: "It's a different world."

Shares in Xerox, which has roughly 6,500 workers in the Rochester area, closed up .09 percent Friday at $9.14.

Here's the text of the news release:

The Board of Directors of Xerox (NYSE: XRX) announced today that Ursula Burns will serve as chairman of the board of the Document Technology company following the completion of the separation of Xerox into two independent, publicly-traded companies. Burns will continue in her current role as chairman and chief executive officer of Xerox until the separation. 

In January, Xerox announced it would separate into two stand alone, market-leading companies – a Document Technology company comprised of its Document Technology and Document Outsourcing businesses and a Business Process Outsourcing (BPO) company. The separation is on track to be completed by the end of 2016. The Document Technology company will be a global leader in document management and document outsourcing with $11 billion in 2015 revenue. 
 
“Ursula’s deep industry experience and relationships along with her proven leadership skills will be valuable assets for the Document Technology company and will help ensure a smooth transition to a new management team,” said Ann Reese, Xerox’s lead independent director. “The company will be well positioned to leverage its global industry leadership, strategic focus and ability to innovate post-separation and we are very pleased that Ursula will continue to play a critical role in making that happen.”

“I am looking forward to my role as chairman of the Document Technology company and to continuing my deep personal and professional commitment to its success,” Burns said. “I remain focused, however, on ensuring Xerox and the post-separation companies are positioned to build on our strong heritage and capture new opportunities we have identified to create value for employees, customers and shareholders.”

“Our search for leadership is well underway and we have an extremely strong pool of talent across our organization as well as external candidates to build our management teams,” Burns added. “We have made significant progress toward creating two strong companies and I am confident that our decision to separate will position both businesses for continued success.” 

The Document Technology company will lead the market with superior technology, solutions and innovations that optimize document management in an increasingly interconnected, digital world. Its strong profitability and free cash flow generation will enable significant capital returns and provide for selective investments in attractive growth areas. 

The BPO company will be an industry leader that helps businesses and governments manage large-scale, transaction intensive processes with their patients, commuters, travelers, citizens, and employees. With approximately $7 billion in 2015 revenue – more than 90% of which is annuity based – the company is focused on attractive growth markets including transportation, healthcare, commercial and government services. 

► Xerox accelerates cuts as revenue falls

► Burns: We're not looking to sell Xerox

► Xerox split to be completed in 2016