Anders C. Moberg
1950–



Chief executive officer, Royal Ahold

Nationality: Swedish.

Born: 1950, in Smaland, Sweden.

Family: Married (wife's name unknown); children: three.

Career: IKEA Group, 1970–1986, various positions; 1986–1999 president and chief executive officer; Home Depot, 1999–2002, president, international division; Royal Ahold, 2003–, chief executive officer.

Awards: International Award, National Retail Federation, 1992.

Address: Albert Heijnweg 1, 1507 EH Zaandam, The Netherlands; http://www.ahold.com.

■ As president of IKEA Group from 1986 to 1999 Swedish-born Anders C. Moberg played a key role in the company's global expansion. After nearly 30 years of working under IKEA's autocratic founder, Ingvar Kamprad, Moberg left the furniture retailer to become president of the international division of Home Depot but less than three years later resigned when Home Depot cut back on its plans for overseas expansion. In 2003 Moberg resurfaced with Royal Ahold, having been named CEO of the Dutch supermarket conglomerate, which had expanded too quickly and taken on an excessive level of debt, a situation exacerbated by an accounting scandal that cost Moberg's predecessor his job. For Moberg the challenges at Ahold were formidable. At stake were not only the company's future but also Moberg's hard-won reputation. Moberg was certainly well suited for the task of running a global business. A true internationalist, the gregarious Moberg, married to a woman who was half German and half Norwegian, was fluent in Danish, English, French, and German in addition to his native tongue of Swedish. Moberg was considered hardworking, efficient, and innovative—traits put to the test as he attempted to bring order to Ahold's far-flung operations, return the company to profitability, and establish a sound base for sustainable growth.

Anders C. Moberg. AP/Wide World Photos.
Anders C. Moberg.
AP/Wide World Photos
.

SMALAND VALUES INFLUENCE BOTH IKEA AND MOBERG

Moberg was born in 1950 in Smaland, a small, rock-strewn town in Sweden approximately 400 kilometers south of Stockholm. He was the son of a farmer and a teacher. Growing up on a farm, Moberg naturally learned the importance of hard work, simplicity, and thriftiness—all values reinforced by his community. At the age of only 14 Moberg took a job at a local sawmill, going to work at 6 o'clock in the morning. He recalled that every morning he saw Ingvar Kamprad driving to work. Moberg likely did not suspect he would spend almost three decades of his life working closely with Kamprad, IKEA's founder.

When Moberg began working at the sawmill, Kamprad had recently opened his first IKEA store outside of Sweden. Like Moberg, Kamprad had grown up on a farm. Kamprad displayed an early penchant for business, at the age of five buying matches in bulk and reselling them individually at a profit. Later in childhood he peddled Christmas cards, pens, watches, and other cheap trinkets. Kamprad was only 17 when he started a mail-order business, registering it as a company in 1943. Kamprad named the company IKEA, an acronym formed from his initials and the first letters of Elmtaryd, the family farm, and Agunnaryd, the Smaland parish where he was born. IKEA did not start selling furniture by mail order until 1952. Kamprad applied to furniture the Smaland values that proved influential in both his and Moberg's business careers: striving for affordable, good-looking, and functional furniture to serve a modest and decent life. The virtues of thriftiness, efficiency, and innovation found full expression in 1955 when an IKEA employee decided to ship a table with the legs packed under the tabletop. The result was the birth of furniture consumers could assemble themselves and an idea that transformed IKEA into an international concern. The first retail outlet was opened in 1958 in Almhult, Sweden. Stores were opened in Norway in 1963 and Denmark in 1969.

JOINS IKEA IN 1970

In 1970, at the age of 19, Moberg dropped out of college and went to work for IKEA in the mail-order department in what he intended to be a temporary position. He was quickly taken by the spirit of the company, became an enthusiastic employee, and caught the eye of Kamprad, who took on the young man as his protégé. Moberg was shuffled among departments to gain a fuller understanding of how IKEA worked. In 1974, in his first trip outside of Sweden, Moberg was dispatched to Zurich, Switzerland, to open an IKEA store, the first outside of Scandinavia. In a June 5, 1997, profile in The European , Moberg recalled, "It was a good thing I knew something about construction because a lot of the decisions about store building fell on me." Over the next five years Moberg opened stores in Germany and Austria. In 1979 he was groomed on the operational side, serving six months as a vice president of the German store, the highest-grossing store in the IKEA chain. Moberg was subsequently named the president of the Switzerland/Austria operation, a position he held until 1982, when he became the head of the French unit.

Moberg displayed a creative side to his personality by playing a key role in the shaping of the IKEA brand in the early 1980s. The company was in danger of becoming pigeonholed as a cheap furniture outlet when Moberg began to pursue the marketing angle that economy was a virtue, a belief that had been instilled in both Moberg and Kamprad while growing up in Smaland—as evidenced by IKEA's policy that executives travel economy class and stay in two- and three-star hotels. Smaland natives were so legendary for their parsimonious ways that "Smalander" jokes were a staple of Swedish folk humor. Moberg-inspired advertising compared IKEA furniture to more expensive, upscale furniture, employing tag lines such as "IKEA is not for the rich but for the wise." Once the idea of equating IKEA with a smart, practical decision was well established in the mind of the consumer, the advertisements took another leap forward: IKEA furniture was lushly photographed in palatial settings with no text at all.

NAMED IKEA'S PRESIDENT AT AGE 35

Although a number of executives in the organization were more experienced than Moberg, Kamprad in September 1986 selected the young-looking 35-year-old Moberg to become the president of IKEA's worldwide organization. Moberg told Hale Richards in an interview for the European that he was as surprised as anyone by the decision: "I was stunned. I had literally never dreamed of such a thing happening to me" (June 5, 1997). Although he had spent 16 years at IKEA, Moberg was not fully ready to run the company and for a few years appeared somewhat uncomfortable in the role of chief executive. Kamprad, only in his early sixties, was still on board as chairman and was still very much involved in running the company. He provided Moberg with adequate time to gain confidence in the job. The pair spent considerable time traveling together, often pausing to take the pulse of ordinary consumers in the belief that such work was too important to be delegated to others. Moberg often recalled a seven-hour train trip through France—in a second class coach—during which Kamprad conducted impromptu market research with "what seemed like 5,000 French people. I couldn't get him to stop" (June 5, 1997). But Moberg proved no different from his mentor, having absorbed IKEA's culture and rivaling Kamprad as its embodiment. Talking about the self-reliance of IKEA employees, Moberg explained to the European , "We like to give our coworkers a lot of responsibility and a chance to fulfill individual potential. Personalities and talents flower within our group" (June 5, 1997). He could have easily been talking about himself, a college dropout who rose through the ranks to a position of prominence just short of that held by the company's founder.

When Moberg was more comfortable in his capacity as IKEA's president, Kamprad began to step back and allow his protégé to truly carry out his job, although by his own admission Kamprad could not resist meddling on occasion. Moberg spent approximately one-half of his time out of the office, visiting stores and meeting with local managers as well as being actively involved in product development. Once an active participant in sports, playing soccer and handball, Moberg came to prefer spending his limited free time with his wife, son, and two daughters.

Moberg faced a number of challenges at IKEA. Soon before Moberg was named president the company entered the U.S. market and proceeded to expand confidently. IKEA faced stiff competition in the United States from big-box rivals such as Wal-Mart and Target and from Ethan Allen Interiors and Pier 1 Imports. In 1990, immediately before the U.S. economy lapsed into recession, IKEA became overly ambitious, acquiring five California stores owned by STOR Furnishings International. The stores proved unprofitable, an experience that sobered Moberg and the rest of IKEA's management. Not only in America but also in Europe, IKEA found business becoming increasingly competitive. Moreover, IKEA failed to successfully adapt its furnishings to conform to American tastes. The situation grew bad enough that in 1995 Moberg warned that IKEA was in a state of crisis. Under his leadership the company rebounded. Over the next two years IKEA closed two of its 21 North American stores and cut office staff. It also placed a greater emphasis on designing products more suited to the U.S. market. For example, deeper kitchen cabinets suited the size of larger American appliances, and sofas were softer. As a result of these changes the U.S. business showed considerable improvement.

LEAVING IKEA AFTER 29 YEARS

As the end of the 1990s approached it appeared that Kamprad would not be retiring any time soon. He also did not appear inclined to turn over Moberg's job to any of his three sons, all of whom worked as IKEA managers. Kamprad was so adamant that his sons not be tempted to one day fight over control of the business that in 1984 he made an irrevocable gift of all of his equity in IKEA to a Dutch charitable foundation, thus preventing his children from inheriting the company. Although his position at IKEA appeared secure, Moberg accepted the post when Home Depot approached him in 1999 about heading its international division. The reason the 49-year-old Moberg offered was simple enough: "I wanted to do something else after 29 years at IKEA" ( Wall Street Journal , March 23, 1999). In the press observers speculated that Mo-berg left because he concluded it was unlikely he would ascend to the chairmanship of the company.

Moberg joined Home Depot as president of the international division in September 1999, as the retailer was about to enter Argentina and Chile as part of a major international expansion. Moberg also opened Home Depot outlets in Mexico and Canada and was charged with assessing the possibilities of expansion into Europe and Asia, but his tenure at the company proved short-lived, and he left no lasting mark. As Home Depot's U.S. sales growth began to slow, the company quickly retreated, opting instead to focus its attention on rebuilding its core domestic business. In October 2001 Home Depot sold off its South American operations, and in January 2002 Mo-berg decided it was time to resign and pursue other opportunities.

ROYAL AHOLD BECKONS

Moberg sat out more than a year before deciding on his next career move. He found it in the Dutch supermarket conglomerate Royal Ahold, which in 2003 was mired in an accounting scandal that rivaled those of Enron and WorldCom. Moberg was hired in May 2003 to replace the CEO Cees van der Hoeven, who in the previous decade had spent $19 billion on acquisitions to grow Ahold into a global business earning $65 billion a year. Early in 2003 the company announced that it had overstated its profit by at least $500 million over the previous two years. This news resulted in van der Hoven's ouster. At the center of the controversy was the distributor U.S. Food-service, a 2000 acquisition. Two of this company's managers were accused of taking advantage of the subsidiary's poor tracking system to inflate the amount of promotional rebates received from suppliers. In addition, the rebates were booked prematurely, creating a false impression of profitability for both U.S Foodservice and its corporate parent.

Although Moberg lacked a background in food retailing, his appointment to the top post at Ahold was generally well received. Moberg was very much a global executive, had held positions of authority at two well-respected retailers, and was not a Dutch insider, giving him the opportunity to see the company with fresh eyes and the freedom to clean house. Soon after Moberg accepted the job, the accounting irregularities deepened. The amount of overstated earnings was recalculated to $1.1 billion and stretched back to 2000. Moberg's challenges, however, extended well beyond steering the company past the accounting scandal. In its rapid rise, Ahold had taken on far too much debt and was in many ways a disjointed collection of assets.

Taking over as acting CEO until the appointment was formally approved at the annual general meeting of shareholders later in the year, Moberg quickly exhibited the strengths he had cultivated since the start of his business career. As he and Kamprad had done many times at IKEA, Moberg took to the road. He paid visits to numerous Ahold supermarkets in Europe and the United States, getting to know the business as well as talking with employees and customers. On the other end of the spectrum, Moberg met with members of the financial community to help buoy investor confidence. In a speech delivered to shareholders on September 4, 2003, Moberg was able to offer a general vision for the company. His view of Ahold and a broad-brush approach to solving its problems were very much a reflection of his character. Moberg espoused simplicity and efficiency, pointing out that Ahold had lost its focus, attempting "to be everything to everybody. That's expensive! For example: we are in hypermarkets, compact hypers, supermarkets, convenience stores and even in discount. In addition, we run production facilities and own specialty stores and pharmacies." Moberg also considered the corporate structure too complex, with "too many overlapping initiatives at different levels and unclear responsibilities." As a result the company had difficulty providing efficient controls. Moberg also espoused practicality, maintaining that many underperforming assets had to be sacrificed. He emphasized that Ahold needed to change its mindset, revealing his belief in the importance of creating a sound corporate culture and esprit de corps. Most important, Moberg wanted to make customers the company's top priority, a philosophy in keeping with the values he had learned during his 30 years at IKEA.

Even before he presented his thoughts to shareholders, Mo-berg had started the process of divesting noncore assets, exiting from South America and Asia. To the surprise of many Mo-berg announced that he did not believe it was in the company's best interest to sell U.S. Foodservice. The foodservice market in the United States was estimated to be worth in excess of $160 billion. The largest national player, SYSCO, controlled only 15 percent of the market. In second place, U.S. Foodservice had an 11 percent share, or more than $18 billion. Because there was so much room for growth Moberg decided it was worth devoting the time and resources necessary for getting the business on track and growing.

SALARY CONTROVERSY

Moberg discovered that heading a public company posed a different set of problems than he faced at privately-held IKEA. He found himself caught up in a minor scandal of his own involving the amount of his pay. Many shareholders were infuriated and grilled him about his salary at the September 2003 meeting. Moberg's two-year contract was worth $6.8 million, high by Dutch standards, and seemed especially lavish in light of the company's recent accounting irregularities. Moreover, Moberg had a severance package of $11.35 million collectable even if he were to resign immediately as well as 125,000 shares of stock he could cash in as well. Some shareholders requested that the pay package be renegotiated and that the vote on Moberg's post be postponed until the next shareholders' meeting. Henny de Ruiter, the chairman of the board, refused; the vote took place; and Moberg was appointed. The controversy over his pay did not abate, however.

Moberg's negotiation of a lucrative contract was less a reflection of greed than of his practical nature. Moberg maintained that when he agreed to take the job he had little information about the true state of Ahold's affairs on which to base his decision. The amount of his pay, in his opinion, was simply a function of the risk he was assuming. If his ability to serve as an effective CEO were to be derailed by unknown circumstances that had occurred before he took over, his reputation would be damaged and his career prospects diminished through no fault of his own. By October 2003 Moberg and the Ahold board had agreed to a restructuring of his contract whereby much of his salary was tied to his meeting seven criteria. In what was likely part truth and part face-saving, Mo-berg said that he was comfortable with the new arrangement because after spending several months analyzing Ahold, he was reassured about the risk he was taking and no longer needed the guarantees of the original contract.

Moberg formalized the ideas he presented to the shareholders and launched a new financial plan and strategy called "Road to Recovery," which was intended to put Ahold on course to return to an investment-grade portfolio by the end of 2005. U.S. Foodservice also was implementing a three-step plan to turn around its business. Moberg estimated that because of the need to calm shareholders, assuage creditors, and take care of corporate-governance matters, he was able to devote only approximately 20 percent of his time to actually running the business. As he explained to the Wall Street Journal , "Instant information these days means you can't hide in the executive suite…. Sometimes you ask yourself if it is possible to fulfill all the demands on you and whether you have the right balance" (November 24, 2003). Although daunting, it was a challenge Moberg appeared well prepared to take on.

See also entries on The Home Depot, Inc., IKEA Group, and Koninklijke Ahold N.V. in International Directory of Company Histories .

sources for further information

Bilefsky, Dan, "CEOs in Europe Try to Regain Trust," Wall Street Journal , November 24, 2003.

Colangelo, Michael, "IKEA's World: A Unique Structure and Philosophy Speeds This Swedish Furniture Giant Ahead," HFD: The Weekly Home Furnishings Newspaper , May 25, 1987.

Crouch, Gregory, "Dutch Grocer Tries to Calm Furor Over Pay," New York Times , September 18, 2003./bibcit.composed>

Hagerty, James R., and Almar Latour, "Home Depot Adds Moberg of IKEA for Foreign Push," Wall Street Journal , March 23, 1999.

Moberg, Anders, address to shareholders, September 4, 2003, http://www.ahold.com/investorrelations/events/030904_Final_presentation_GM.pdf .

Reilly, David, and Kelly Greene, "Ahold's Choice for Chief Executive Cheers Investors," Wall Street Journal , May 5, 2003.

Richards, Hale, "Preacher Spreads IKEA's Gospel," European , June 5, 1997.

Timmons, Heather, "Ex-Chief of Ikea Is Named Top Executive at Royal Ahold," New York Times , May 3, 2003.

—Ed Dinger



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