J. Raymond Elliott’s decision to step down as CEO of Boston Scientific (NYSE:BSX) began a little more than a month ago, when the company’s board asked him to document the accomplishments of his two-year tenure.
As he spent an entire Sunday on a detailed outline of the past and — more importantly — the future of the Natick, Mass.-based medical device maker, the answers to their questions became the answers to his, Elliott told investors today at the Bank of America Merrill Lynch Health Care Conference in Las Vegas.
Two years on, the turnaround wasn’t fully complete, but the 61-year-old was confident that the pieces were in place for him to hand things over to the next generation. Someone who, in his words, would lead the company for the next five to 10 years.
“Leaving too soon and staying too long are problems. The answer is when is the begginning [of the next phase], when is it in the right place, the right time,” Elliott explained. “I say that’s the end of this year. I may be wrong or right by six months, I have no idea. Sticking around to see the turnaround through would mean executing a large portion of it, and at my age I don’t want to do that. I don’t want to be doing this when I’m 66 or 68 years old.”
Investors shouldn’t read anything in the decision, he added, other than that he believes the turnaround’s momentum will be such that BSX will be in good enough shape to hand over to someone else.
“Everything will be in place, the heavy lifting will be done and we’ll get someone in there for ten years,” he said, adding that he plans to stay on the board of directors for many years. And he denied that the decision was related to health.
“I got plenty of punch left in me,” Elliott said.
The Canada native essentially ruled out COO Sam Leno, a longtime Elliott lieutenant, as his replacement.
“I wouldn’t think so, given his age,” Elliot said of the man with whom he’s worked for close to 40 years. Leno, 65 , was with Elliott for his turn-around of Zimmer Holdings Inc. (NYSE:ZMH).
Elliott is executing a similar game plan to the one he used until his departure from Zimmer in 2007. There, Elliott announced his decision to step away a year prior to his departure, eventually handing the reins to then-43-year-old David Dvorak. The latter had served under Elliott as president of Zimmer’s global business and as chief legal officer.
If it’s a habit for Elliott to hand-pick a younger successor, then some signs point to 46-year-old BSX CFO Jeffrey Capello, whom Boston Scientific hired in 2008 and tapped for CFO in March 2010. (Cappello replaced Leno as CFO in a management re-shuffling that saw Elliott turn over some 75 percent of his senior management team.)
Capello is a former PerkinElmer (NYSE:PKI) SVP. He was hired in 2008, replacing Leno in a re-shuffling of the deck last year. (Since Elliott took over, Boston Scientific has made major changes to its senior management, turning over 75 percent of its top-level roster.) The young finance chief has taken an increasingly visible role during earnings calls and investor conferences, a possible sign that he’s being groomed for bigger things.
Elliott’s successor will have to agree with the plan his team has put in place over the past 22 months — or most of Capello’s time in Natick.
“We’re not going to hire someone and say we already know what to do,” Elliott said. “But we’re not going to have someone [who looks at the plan] and says, ‘Blow all this up.’ That’s not going to happen.”
And Capello also fits into Elliott’s vision for a more capital-efficient Boston Scientific, given that one of his stated goals is to generate “double-digit, consistent bottom-line growth.”