Another crack in the glass ceiling.

A. Barry Rand lands CEO spot at Avis

After a 10-month hiatus from the executive suite, master marketer Addison Barry Rand has emerged as the new chairman and CEO of Avis Rent A Car Inc. Rand, 55, former executive vice president of worldwide operations at Xerox, is the third African American to be named to and assume the top spot at a Fortune 500 company.

The $4 billion Garden City, New York-based car rental company had been without a CEO since the departure of R. Craig Hoenshell in December 1998. It had been led by a triumvirate consisting of Robert Salerno, Kevin Sheehan and Mark Miller, with each officer focused on an element of the business: business affairs, car rental and vehicle management. All three will now report to Rand.

"Barry is an outstanding business leader in the truest sense, able to inspire people and create transforming, positive change in large-scale organizations," said Martin L. Edelman, chairman of the executive committee of the board at Avis. "His successes in both the business-to-business and retail arenas fit perfectly with Avis, which is primarily a business-to-business operation and has a major consumer brand. Barry has shown that he can realize a company's potential to develop profitable revenue streams from outsourcing and information-based solutions, an essential component in Avis' strategy moving forward."

Rand retired from his post in January 1999 after a 30-year career. In that post, he managed $18 billion in revenue and 70,000 employees in more than 150 countries. His departure came after he was bypassed for the president and COO's seat by G. Richard Thoman, formerly of IBM, in June 1998. Then the highest-ranking African American in the company, Rand wanted to pursue external CEO opportunities. He stayed on for another six months following Thoman's appointment to ensure an orderly transition. "I left as an active executive in January 1999, but I have a great relationship with the company," says Rand, who continued to maintain an office and support staff at the Stamford, Connecticut-based copy-machine maker until his recent announcement.

His appointment to the CEO spot at Avis is the culmination of what many, including BLACK ENTERPRISE, had forecast when Rand was named president of Xerox U.S. Marketing Group in 1987. "Originally, when I decided to leave I was focused only on Fortune 500 companies. All of my advisors suggested that I set aside nine to 10 months for this search, so that has met my expectations," said Rand in an interview from his home.

Rand will get his opportunity to suit up and put his skills to use at what everyone in the company calls the "new Avis." His management and marketing skills will be an essential ingredient in helping Avis meld its new acquisitions, PHH North America, PHH Europe and Wright Express, into its existing structure. The three units focus on vehicle fleet management and leasing, along with a substantial credit card business. The companies were purchased from New York-based Cendant Corp., Avis' parent company, for $1.8 billion in cash and stocks, and integrated into the company by June 1999.

"Avis offers a great opportunity. It is a Fortune 500 company. It has an international dimension. It is a company that fits my skill set, which is managing companies of scale and international businesses, [using] my management skills," explains Rand. "Avis is a company that is being transformed. It is translating into a service and information-focused company providing a full array of business management solutions."

Known for his marketing skills, Rand rose through the ranks at Xerox upon joining the company in 1968 as a sales trainee. He held a variety of marketing and general management positions before being named president of U.S. customer operations in 1986 and executive vice president in 1992.

It was agreed that the operation should be sales and marketing focused, and "that plays to Barry Rand's extensive strengths," says David Joys, senior partner at Heidrick & Struggles, the executive search firm that brought Rand's name to the table.

Avis initially launched a search for a new CEO in February, but abandoned it three months later when it began the acquisition of PHH. The company went with the internal triad during the process, but realized over the next several months that the structure was not an optimal solution.

"The board realized that it needed new, individual leadership," Joys adds. Rand had initially been interviewed by the executive search firm as part of its list of candidates in July when Avis relaunched the search only to suspend it three weeks later. But when Band's name was mentioned by Kenneth I. Chenault, president and COO of American Express, to Henry B. Silverman, chairman, CEO and president at Cendant, as someone Cendant should consider adding to its board, the search was reopened with Band as the lead candidate for the CEO's post.

"Clearly Avis has a strong brand name and we at American Express have had a good relationship with them," says Chenault. "Barry has demonstrated leadership skills and it's a very good hire by Avis. I know he'll do a great job. That's why I recommended him in the first place."

According to Joys, Band's greatest challenge will be energizing Avis as a significant competitor in the marketplace by using technology, product design and development and, most important, business-to-business marketing and development. "But this is what Band does well and has done so in an entrepreneurial fashion within Xerox," explains Joys. "He's moved into troubled businesses and fixed them, built new businesses and grown businesses substantially. This is all big-time business."

Analysts say Avis must increase its market share and margins in a highly competitive marketplace to boost its overall earnings and to close the gap on the leader in the car rental business, Hertz. While there will probably be some cost controls implemented in refining the new structure, a large part of what's needed will be to drive the top line, and that should play well to Band's strengths.

"[If] customer service is his claim, then he will have to come up with something that makes us [consumers and business] believe that Avis is a first-class operation," says Steven Singleton, research director of Robert Van Securities in Oakland, California. He predicts there will probably be a strong marketing effort to clarify the company's new structure and to boost the brand. Senior equity research analyst Robert P. Napoli of ABN AMBO, a large, global investment bank in Chicago, rates the Avis stock (NYSE: AVI) a "buy," although the initial announcement did very little to change the stock's trading price of $18.94 per share (November 9). Both analysts point to the stock trading at a low price-to-earnings ratio--only eight times its earnings when the industry average is 11 to 12 times earnings--although the company's earnings are growing at a 17% to 18% annual rate. As such, Singleton feels the fair value estimate of Avis' stock should start around $30 and rise to the industry average of $50 over the next 12 months. Additionally, the company has a very healthy balance sheet, with five successive quarters of financial growth.