Action speaks loudest for B&L chief

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By If one were pressed to pick a single word to describe Brent Saunders, modest would not be the worst choice.

Slight of build, soft-spoken and unfailingly polite, Saunders easily could be taken for a year or two younger than his 40 years. His brown hair is neatly combed. His suit is dark and well-tailored, but not flashy. His manner is open and friendly. He answers questions fully and directly in plain English largely free of buzzwords.

In short, Saunders, who was named CEO of Bausch & Lomb Inc. in March, comes off as more of a Boy Scout than a corporate top gun at the helm of a global enterprise.

But Saunders is the man Bausch & Lomb chairman Fred Hassan sees as the ideal candidate to pump up the eye-care company’s anemic top-line growth. He worked under Hassan, the former CEO of Schering-Plough Corp., as that firm’s global head of consumer health care.

At Schering-Plough, Hassan achieved almost legendary status for engineering a disciplined turnaround of a nearly moribund company. When he was named CEO in 2003, Hassan took the reins of a company that was short of cash, owed the Food and Drug Administration $500 million and had seen sales slump badly for several quarters after its main profit engine, the allergy drug Claritin, went off patent.

Hassan and Saunders left Schering-Plough in 2009 after Merck & Co. paid $41 billion to acquire a firm that had drastically cut expenses, diversified its product offerings and vastly beefed up its top and bottom lines.

Saunders calls Hassan a mentor who "taught me a lot."

That Saunders might be called his protŽgŽ was not the key point in the Bausch & Lomb board’s selection of Saunders to head the eye-care company, Hassan insists.

"The board selected Brent not because he was with Schering-Plough," Hassan says. "He had a powerful track record. Brent was the best man for the job."

Eastman Kodak Co. chairman and CEO Antonio Perez, a former Schering-Plough director, echoes Hassan, calling Saunders’ performance at Schering-Plough "nothing short of spectacular."

"He exercised tremendous creativity and business judgment and, with very limited resources, created significant growth and shareholder value," Perez observes. "He took on a very difficult role as chief transformation manager for the company, (executing) the integration of a very large, complex acquisition with tremendous skill."

Though Bausch & Lomb’s situation is by no means as dire as Schering-Plough’s position in 2003, his charge could be seen as engineering a scaled-down version of the Schering-Plough turnaround.

New era at B&L

The March appointment came some three and a half years after Bausch & Lomb was acquired by Warburg Pincus LLC. A New York City-based private equity firm, which Hassan serves as a senior adviser, Warburg Pincus paid some $4 billion for the publicly traded Bausch & Lomb, taking it private.

A leading maker of contact lenses, Bausch & Lomb also has eye-care-oriented pharmaceutical and surgery divisions. Founded in Rochester by a pair of 19th-century German immigrants as a two-man eyeglass shop, it is now a global business employing some 11,000 people, 1,500 locally.

Starting in the mid-1990s, Bausch & Lomb endured a series of debilitating blows. It had to restate quarterly earnings after the Securities and Exchange Commission judged sales figures to have been inflated.

In 2006, Bausch & Lomb’s ReNu with MoistureLoc contact lens solution was found to have an associative link to fusarium keratitis, a corneal fungal infection. Resolving its accounting issues with the SEC and pulling the lens solution from store shelves, however, did not entirely get the company back on track.

Some three months after Warburg Pincus took control of Bausch & Lomb, Chairman and CEO Ronald Zarrella retired and Warburg Pincus tapped former Johnson & Johnson World Vision Care executive Gerald Ostrov to replace him.

Hassan credits Ostrov, whom Saunders replaced, with stabilizing the eye-care company, but he says that after three years under Ostrov, Bausch & Lomb’s performance still lagged.

"It was losing market share," Hassan says. "That was not acceptable."

Under Ostrov, Bausch & Lomb shed some 2,000 workers worldwide.

When he came on board, Saunders says, the company’s "cost structure and manufacturing footprint (had been) brought into line and the company was rightsized. I clearly saw that we were on a track to be the best, not the biggest."

In the Bausch & Lomb he inherited, Saunders sees a company more in need of a refining than a major restructuring.

As a privately held firm, Bausch & Lomb does not disclose its financial results. In 2006, the last full year it reported as a public company, the firm posted earnings of $14.9 million on revenues of $2.3 billion. Saunders says its earnings since have grown at a double-digit rate.

The company has a strong presence in North America and Europe and has established a good foothold in China and Asian markets, Saunders says. The Latin American market, which he believes is poised for explosive growth across South and Central America and particularly in Brazil, is slated to play a larger role.

In October, Bausch & Lomb hired Mariano Garcia-Valino, a Brazilian pharmaceuticals veteran, to head a new Brazil-based Latin American division. Much of Saunders’ plan for Bausch & Lomb does not involve new divisions or market openings; instead, the focus is on its people and how Saunders thinks the firm’s corporate attitude should be adjusted.

Business guru and author Ram Charan, who served as a coach and adviser to Saunders at Schering-Plough, says Saunders’ strongest points are an ability to motivate his employees and an acute perception of external forces impinging on a company-abilities that combine to produce the opposite of groupthink in organizations Saunders leads.

"He has a very important ability to see what is happening out in the world before others see it," Charan notes.

Saunders’ vision incorporates not only business and market trends but political and regulatory forces in an intuitive mashup "unusual for executives of his generation," says Charan, who compares Saunders’ combination of operational skills, people skills and general insight to a slightly older generation’s super-CEOs, Microsoft Corp.’s Bill Gates and Apple Inc.’s Steve Jobs.

Culture change

Bausch & Lomb’s current three-part structure-vision care, pharmaceuticals, and cataract and vitreoretinal surgery-is "an adequate platform for growth," Saunders says. What is needed now is "to flatten the company," eliminating hierarchical divisions separating managers from operations.

One of his most visible early steps is a plan to move Bausch & Lomb’s corporate headquarters out of the top floors of the palatial world headquarters building the company erected in the mid-1990s. It is an initiative that might be taken to be symbolic, but which Saunders sees as practical.

Set on a circle constructed by the city of Rochester to accommodate it, Bausch & Lomb’s downtown tower is faced with pink granite and graced with a soaring, glass-topped atrium housing a fountain and winter garden. It unquestionably constitutes some of downtown Rochester’s top class A office space.

But while some might view the headquarters tower as a fitting symbol of corporate puissance, Saunders thinks the building needlessly separates company executives from the nitty gritty of Bausch & Lomb’s operations.

He wants to bring the firm’s executives literally down to earth, moving the corporate hub from the downtown structure’s upper floors to an unprepossessing, three-story office complex attached to Bausch & Lomb’s North Goodman Street manufacturing and research and development facilities.

When the firm in June announced the planned headquarters move, it gave a 2013 deadline for accomplishing the transfer, implying that a sale of the building-or at least finding a tenant to move into the floors vacated by Bausch & Lomb-would need to come before any move.

In fact, Saunders plans to move his own office and those of managers reporting directly to him as soon as renovations to the Goodman Street offices, now under way, are finished.

Other executives will move to Goodman Street as it becomes practical, Saunders says, regardless of whether the firm has found a buyer for the headquarters building or the downtown space is leased to another tenant.

Moving is not a matter of saving money, he adds. The building, which Bausch & Lomb now owns, supports itself and still would be marginally profitable if the company’s corporate office space were vacant. Flattening Bausch & Lomb’s management structure, changing its culture, is the primary goal.

To keep himself attuned to ground-level operations, Saunders travels frequently, shuttling between Bausch & Lomb facilities around the globe. He is, like the George Clooney character in the movie "Up in the Air," a member of an exclusive club of travelers who have piled up air miles in the many millions and been personally recognized by an airline CEO for it. Unfortunately, Saunders says, he has no free time to use the 5 million frequent flier miles he has amassed.

Saunders, who says he has few non-work pursuits, spends what free time he has with his family. His wife, Amy, and the couple’s young daughters still live in Somerset County, N.J., where they lived when Saunders worked for Schering-Plough.

He has no plans to move his family to Rochester. Because he spends so much time traveling, Saunders is able to grab only a few days at a time with his wife and children. A change of schools would be disruptive for the girls, however, and there would be little point to moving them here, Saunders says. He has a rented pied-a-terre on East Avenue, where he stays when he is in Rochester.

Path to B&L

Saunders, who has a law degree and an MBA, originally planned to be a lawyer but dropped the idea after doing a stint as a summer associate at a Philadelphia law firm. The practice of law would not put him as close to the real action of business as he wanted to be, Saunders concluded.

Senior partners interacted mostly with second-tier lawyers in corporate legal departments or junior company executives, he noticed.

"I wanted to be more involved with senior management," he says.

An upside for the summer associate job: Saunders met his wife, a lawyer then working at the firm. She currently is raising their daughters and is not practicing.

Saunders grew up in Pennsylvania. His family lived near Allentown, where his father worked as a hospital administrator and his mother was a geriatric social worker. When still focused on a career in law, Saunders says, he thought he might work as general counsel for a hospital or health system.

He graduated from the University of Pittsburgh in 1992, earning a B.A. in economics and East Asian studies. While attending the Temple University School of Law in Philadelphia, Saunders also worked as chief compliance officer at Thomas Jefferson University’s Jefferson Health System. He kept the job while he was working toward an MBA, which he earned from Temple University in 1996, a year after earning a J.D.

In 1997, Saunders moved to Home Care Corp. of America as its compliance officer. A year later, he moved to the Maryland-based Coventry Health Care Inc. as the $13 billion managed-care company’s chief risk officer. In 1999, he landed a partnership at Price Waterhouse Coopers LLP, where he headed the accounting and consulting firm’s Pharmaceutical and Life Sciences Business Advisory Group. Saunders was at Price Waterhouse until 2003, when he went to work for Schering-Plough.

After leaving Schering-Plough last year, Saunders did a three-month stint as an adviser to General Atlantic LLC, a New York City-based private equity firm. In March, he accepted the job of Bausch & Lomb CEO.

For Bausch & Lomb, an eventual return to public ownership is highly likely, but how soon that might happen is not clear, Saunders says. Neither is his role if that should happen.

As with all private equity investors, he says, Warburg Pincus eventually will look for an exit; an initial public offering would be among the most likely scenarios. But unlike some private equity firms, Warburg Pincus is patient.

"It’s at least a couple of years away," Saunders says.

Brent Saunders

• Title: President and CEO, Bausch & Lomb Inc.
• Age: 40
• Home: Somerset County, N.J.
• Education: B.A., economics and East Asian studies, University of Pittsburgh,1992; J.D., Temple University School of Law, Philadelphia,1995; MBA, Temple University, 1996
• Family: Wife, Amy; daughters Amanda, 10, and Maya, 8
• Leisure activity: Time with family
• Quote: "I clearly saw that we were on a track to be the best, not the biggest."

12/3/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail [email protected].