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New chapter unfolds at Carlson Cos. with naming of first non-family CEO

In a high-profile ceremony at its headquarters today, Carlson Cos.

In a high-profile ceremony at its headquarters today, Carlson Cos. Chief Executive Officer Marilyn Carlson Nelson named French-born Hubert Joly as the first non-family CEO in the company’s 70-year history.

The handover, effective March 1, caps a long search for a successor to Carlson Nelson, who is the daughter of founder Curtis L. Carlson.

Carlson Nelson has led the company for the past decade, a rocky era when the company’s travel and lodging businesses suffered in the wake of the 2001 recession and the 9/11 terrorist attacks. She continues as chair of the company’s board, and the family remains in control of the company.

Joly, 48, currently chief executive officer and president of the Minnetonka-based company’s Carlson Wagonlit Travel unit, joined the company just three-and-a-half years ago to take the two posts.

He had been executive vice president in charge of U.S. assets for Vivendi International. Before that, he was a vice president at Electronic Data Systems Europe and president of EDS France. Earlier, he spent 12 years at McKinsey & Co in San Francisco, New York, Tokyo and Paris.

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Carlson officials handled the announcement with a flourish, calling it “historic” and filling an assembly hall with employees that Joly admiringly called “Carlsonians.” Carlson Nelson paid homage to her father’s heritage and to the employees.

Carlson Nelson, 68, is one of the country’s highest-ranking women in business and the leader of a clan that to some has become Minnesota’s most prominent business family. In its latest annual list of the 400 wealthiest Americans, Forbes magazine ranked her and her sister, Barbara Carlson Gage, in a tie for 204th place — each with fortunes valued at $2.2 billion.

The family business is one of the largest privately held companies in the world, owning or managing operations in 150 countries. Both the Carlson Wagonlit unit, its largest, and its Radisson Hotels division are two of the world’s most familiar business brands.

Harvard study tracks her climb
A 2005 case study of the company and Marilyn Carlson Nelson’s ascent, done for the Harvard Business School, put the company’s “system-wide sales” (including franchised operations) at $26.2 billion for 2004 and its directly owned or managed sales at $8.5 billion. The company says its system-wide sales in 2007 were $37.1 billion.

Her rise to the top was not an easy journey, and once she got there, her job was marked by continuing challenges. Perhaps the toughest test of all came last spring when her son, Curtis Nelson, went to court alleging that the company removed him from a key job and pushed him off the CEO track promised to him by his grandfather.

The company rejected his charges, countering that he “demonstrated inconsistent behavior, an explosive temper and lack of mature business judgment” and that his mother was his biggest supporter.

Bill George, the former Medtronic CEO now teaching at Harvard, wrote the business school case with research associate Andrew McLean. The study hails the company’s entrepreneurial rise to global status under Curt Carlson but also praises his daughter for bringing a more friendly culture to the company. It says he “never encouraged her to join his company, believing as many men of the era did that women were not meant for the workplace.”

Once, “my father fired me,” Nelson says in the study. “He told me, ‘You’re getting too involved in the business. You’re becoming addicted. You should be at home with your children. I left the building down the back stairs with tears running down my face.'”

In 1989, Curt Carlson announced his formal retirement as CEO and named Edwin “Skip” Gage, daughter Barbara’s spouse, to succeed him. But in 1991, after open-heart surgery, he returned to active management as CEO. Soon thereafter, Gage left the company.

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Carlson Nelson became a full-time employee in 1988, but “management turmoil ensued” after 1991, according to the business school study. Eventually, several newcomers who had been seeking the top job left “after encountering Curt Carlson’s command-and-control management style,” the study says.

In 1998, Carlson Nelson succeeded her father as CEO. Two years later, after Curt Carlson died at age 84, she succeeded him as chair of the Carlson board.

Not an easy tenure
Soon, she found her company rocked by the impact of the 2001 recession and the terrorist attacks. The Harvard study says system-wide sales plunged to $19.8 billion in 2001 from $31.3 billion in 2000 and that sales of company-owned and -managed operations dropped during the same period to $6.8 billion from $9.8 billion.

What about that messy family litigation?

Jon Austin, a spokesman for Curtis Nelson, says “the status of it is unchanged.”

But at the changing-of-the-guard ceremony, Marilyn Carlson Nelson hinted that the family fight is on the mend. Indeed, a settlement, likely to be sealed from the curious eyes of people like you and me, appears probable soon.

In her comments to the crowd, Marilyn Carlson Nelson didn’t mention the litigation but said this: “The good news is that Curtis and his family spent Christmas with us, along with 65 other family members.”