3M & McNerney

Yesterday's Wall Street Journal contained an interview with Jim McNerney, former Jack Welch lieutenant, former 3M CEO, and recently-recruited Boeing CEO.

The interview depicted McNerney as a level-headed, self-effacing, sensible leader.

However, in several passages, he referred to his 3M stint. So I was curious to see what his track record was there. Upon Googling McNerney and 3M, I see that he joined them as their first outsider CEO in December of 2000. According to an article from the time, he said he was going to focus on growing 3M.

What's interesting to me is the pattern of 3M's stock price from about the time McNerney took the helm. Until then, looking back via the Yahoo-sourced chart from 1970 to the present, 3M had pretty much tracked the S&P500 in a lockstep fashion. As the index soared in the bubble years of the late '90s, 3M's trajectory remained more modest, and continued as such after the bubble's deflation in 2001.

As of 2002, however, the two lines crossed. This means that, after some 30+ years, an investment in 3M, aside from dividends, had basically matched the S&P, but done no better. In the three years that followed, two under McNerney, the company began to depart from its index-like performance pattern.

The company's stock price began to exhibit unevenness, with declines and stagnation mixed with a brief updraft in 2003. Then the trajectory fell as the index began to regain strength.

All in all, an ironic track record for McNerney. It appears that under his leadership, 3M's stock price path remained pretty consistent, suggesting that investors didn't really see much difference with McNerney running the company. The only significant changes were bad ones- the dips in price in this decade.

What is not evident in the McNerney era of 3M is a break with its own past stock price path. It failed to noticeably ignite sufficient investor confidence or interest to move its stock price trajectory above the long term path it has been on for 30 years. That is, until recently when it has uncharacteristically flattened.

Does this portend anything for Boeing? From where does McNerney's credibility come, if this is his recent post-GE track record? Surely Boeing's recent stock price performance doesn't yet reflect McNerney's actions. For the record, it hasn't really changed, either, in several years.

I know of nothing negative about Jim McNerney. The comments attributed to him in the WSJ piece seem promising. However, that's about all there seems to be on file to suggest he will lead Boeing where it has not been before this. If 3M is any indicator, I'm not sure I expect Boeing to show any signs of unusually better performance than before McNerney arrived.

I wonder on what basis the WSJ seems so positively disposed toward Boeing and McNerney, given this lack of evidence of his prior accomplishments at 3M.