ST. LOUIS — David N. Farr, whose 20-year tenure at the helm of industrial powerhouse Emerson made him one of the nation’s foremost corporate executives, will retire Friday from the Ferguson-based firm that has long been among the largest companies based in the region.
Emerson announced Monday that Surendralal ‘Lal’ Karsanbhai, who has served as executive president of the company’s largest business segment, Automation Solutions, since 2018, will become the new CEO of Emerson and join the board of directors.
Farr’s retirement marks the end of a career that was among the longest for the chief executive of a Fortune 500 company, a tenure that saw him navigate the economic disruptions following the Sept. 11 attacks, the dot-com bubble, the Great Recession and the coronavirus pandemic. Under his leadership, Emerson maintained its six-decade record of annual dividend increases, even amid trade wars and a global health crisis that ricocheted across its footprint — a $16.8 billion global enterprise with some 200 factories and 85,000 employees, including about 1,400 at its headquarters on West Florissant Avenue.
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Karsanbhai, 51, has worked at Emerson for 25 years. He was president of Emerson Network Power Europe, Middle East and Africa from 2014 through 2016, then group president of Measurement & Analytical from 2016 through September 2018, and has run Automation since then.
“This is an exciting time for the organization as we continue growing Emerson’s global software footprint and expanding the company’s support of essential industries,†Karsanbhai, of Ladue, said in a statement. “I am honored to carry the legacy of Emerson’s leadership into the future and look forward to working with the office of the chief executive to drive these vital goals.â€
Farr, who was named CEO in 2000 and chairman of Emerson’s board of directors in 2004, will remain as chairman through May 4. Farr had long signaled that he would retire in 2021, and Karsanbhai, whose automation solutions segment makes up about two-thirds of Emerson’s revenue, was seen as a likely successor. Another possible contender, Executive Vice President Robert Sharp, ran the smaller commercial and residential solutions business, but he resigned from Emerson last August.
Markets greeted the announcement positively, boosting Emerson’s stock $1.47 or almost 2% to $80.82 on Monday.
But the transition marks a major change for a company and the broader industrial community where Farr, 66, had built a reputation for action and frank discourse that often helped Emerson quickly adapt to major market changes.
“That tenure is really amazing when you look at it,†said Jeff Windau, an analyst at Des Peres-based Edward Jones. “Obviously it’s a lot of continuity, a lot of experience. One of the things that will be missed from the analyst perspective is just his candidness. He was always vocal about what he was seeing what was happening in the economy and the industry. He tended to get out in front.â€
Indeed, Emerson weathered the pandemic well. Though profits were down compared with a year earlier, Emerson and Farr stayed in the good graces of Wall Street as one of the few companies to release a detailed earnings forecast for the year in the pandemic’s early days last spring. Its stock has risen some 10% over the last year.
“Oftentimes companies may be a little more guarded and want to be a little more certain before they talk about trends in the industry,†Windau said. “But David was very candid and outspoken.â€
Only the third CEO in the last 66 years at the company, Farr took the helm from Charles F. “Chuck†Knight, another legend in the industry. Knight was known for his tough management style, famous for calling other Emerson executives in the middle of the night. When he retired, Knight said he expected Farr would have less of a temper.
But Farr was hardly known for going easy on his staff. A St. Louis Cardinals baseball fan, he is known for swinging one of the several baseball bats he keeps in his office to help him concentrate, sometimes using them to nudge other Emerson executives to speak during earnings calls.
Long tenure
Farr joined Emerson in 1981, working his way up the corporate ranks. Before becoming CEO, Farr led Emerson’s Asia-Pacific operations from Hong Kong in the mid-1990s. After being named CEO in 2000, Farr continued to grow Emerson’s global footprint. Sales in Asia were 8% when he started. By 2019, they accounted for over 20%, and factories there had slightly more workers than in the U.S. and Canada. More recently, Farr has directed increased domestic capital investment in reaction to former President Donald Trump’s confrontational trade policies.
Founded in St. Louis in 1890 as a maker of electric motors, Emerson remains one of a shrinking number of industrial conglomerates on Wall Street, which has become more inclined to pure-play companies. Its biggest business now is factory equipment, sensors and software used by manufacturers, oil and gas producers, and utilities. But it still makes consumer-facing heating and cooling equipment such as air conditioning compressors and household products such as the InSinkErator garbage disposal.
Farr has been willing to make tough choices about the future of the firm. In 2016, he oversaw the spin off of its former data center business, a segment he had built up over the years but was willing to let go in order to maintain the growth that the company’s investors had become accustomed to. Decisions like that gave Emerson a reputation as a well-managed, efficient company.
By the end of his run, Farr was a key figure among U.S. industrial companies. He was chair of top industry trade group the National Association of Manufacturers from 2017 to 2019. He serves on the board of IBM, and of the U.S.-China Business Council.
Here in St. Louis, Farr continued Emerson’s role as a key local philanthropic donor. He serves on the board of The Muny and is an active supporter of Forest Park Forever, helping lead a $5 million corporate donation to the recently revamped Emerson Central Fields.
After protests rocked Emerson’s home suburb of Ferguson, with marches during the 2014 unrest often just outside of its corporate campus on West Florissant Avenue, Emerson was a major donor to the new Urban League job training center built on the site of a QuikTrip that burned during rioting. The company has continued to help The Urban League buy real estate left behind after buildings burned along West Florissant.
“We’re losing a very seasoned and well-known advocate for the industrials,†Windau, the Edward Jones analyst said. “Farr, he will definitely be missed. But from an Emerson perspective, (Karsanbhai) has all the right experiences and tools to help navigate the company forward. I anticipate a long run for his tenure as well. It’s kind of the Emerson model. Their CEOs have long tenures.â€
David Nicklaus of the Post-Dispatch contributed to this report.
