Hawaii Business CEO of the Year: Eric Yeaman

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Photos: Mark Arbeit

“I knew it was a long shot to get Eric,” Dods admits. “When he came in, the company was going through bankruptcy, going to be torn apart, and the workers didn’t know if they’d have jobs. He saved the company and almost all the jobs. That’s the way it really ought to be looked at.”

Dods says Yeaman first appeared on his radar during the Kamehameha Schools restructuring. “I had heard on the street that he did a very good job on the accounting side … [that] he was extremely principled and competent.” A little later, Dods spoke to a group of young, future leaders that included Yeaman and afterward they talked. “The more we talked the more I identified with him,” says Dods. “It was my first insight into how he handled people and what his personality and demeanor were like, and I was quite impressed.”

By the time Dods went looking for someone to save Hawaiian Telcom, Yeaman was at HEI. “He had all the qualities I felt were needed,” says Dods. “He understood strategic planning, was a utility executive, believed in community service. … One of the things I look for, too, was he started at the bottom, picking coffee in the Kona mountains.”

When Dods asked, Yeaman felt a sense of mission to rebuild the homegrown utility and reposition it for a more global future. But when he took over in June 2008, the company was falling apart. “The financial situation was dire,” he remembers. The company was $1.1 billion in debt, over-leveraged and requiring total restructuring.

“You have to assess the brutal facts and be honest about the situation and then you can find the path. … We needed to restructure the balance sheet, stabilize the business and reposition it for growth. And that would be shaped by looking for a combination of leaders who would work well in our local culture along with industry expertise from the mainland.”

Yeaman wasted no time. His new leadership team developed what he calls a “believable, strategic, back-to-basics” plan with a focus on what success would look like. Then a broad-based employee committee created a set of company values everyone could relate to their jobs. “I’ve had people tell me, ‘Now I know how my job related to the objectives of the company,’ ” he says.

He ordered an employee engagement survey in his first week and discovered that just 56 percent of employees were happy in their jobs. In the latest similar survey, at the end of 2010, 85 percent said they were happy.

Clockwise from top left: As a one-year-old playing “Mr. Aloha”
at home; age 10 at St. Benedict’s “Painted Church”
overlooking Kealakekua Bay in South Kona, with brother
Scott and sisters Bernie and Tory; 6th-grade picture at
Honaunau Elementary; visited Oahu’s Camp Timberline
during junior year at UH with classmates; UH graduation in
May 1989 with his mother, Camelia, and brother, Shelby.

“The culture is the hardest thing to change, but it’s the ballgame,” Yeaman says. “I read, ‘Who Says Elephants Can’t Dance?’ by Louis Gerstner, the guy who turned around IBM, and at IBM he said the culture was the single most important thing.

“We needed to give employees hope that we had a plan and that this company was being led by someone who grew up here, cares about this company and came here to run it. … I believe we’ve made a lot of progress but there’s still a lot to do.”

Overall, Hawaiian Telcom had 1,500 employees when Yeaman came aboard, and has about 1,300 now. The job losses came from attrition, retirements, outsourcing, store closures and a realignment of job positions due to changes in communications technology. For example, to fast-track growth in areas where it competes with Oceanic Time Warner, the company realigned and redefined some jobs, Yeaman says. The realignment affected about 100 positions, primarily in areas of the business that have eroded or changed, but it opened 70 new or vacant positions geared to growth areas.

Of the union employees initially identified for change, about 30 percent stayed in their same positions because others in the same job classification took new positions; around 25 percent moved into newly created or different positions; and about 40 percent took buyouts. While job losses of any kind are hard, says Yeaman, his focus must be HT’s long-term success.

“There’s no question I’ve faced major challenges and [the labor issue] is a difficult challenge … My job is always to decide what is in the best interests of the company. I have to look at all the stakeholders and come up with what’s best, but we’ll stay the course.”

IBEW Local 1357’s business manager Scot Long declined to be interviewed for this story because of the sensitive nature of the union’s contract dispute, but former Local 1357 leader George Waialeale wasn’t so reticent. He says Yeaman’s compensation has created a stumbling block for some.

At left, Yeaman with Melanie in 1993, before they were
married, at Arthur Andersen’s annual Molokai Open
staff event. At right, with his family in Washington for
Thanksgiving 2010. Along with Eric and Melanie are
Lauren, 14, and Jake, 11.

“When Eric gets a 400-percent raise, and everyone else gets squat, people are not too happy,” says Waialeale, who retired from the company six years ago, yet stays in touch. “But, when it’s better to have a job than no job, then everyone stays quiet. That’s what I hear. Sure they want their jobs. But, if you push the pendulum too far one way, it will swing back to the other and sooner or later the guys are going to get pissed.”

What few know is how much compensation Yeaman relinquished during the two years of bankruptcy proceedings, along with cuts in his compensation package mandated by the company’s lenders.   

“All employees, including me, are part of a performance compensation program designed to make sure we are all focused on the things that are going to create value for the company,” says Yeaman. “It’s very much an incentive-based program, so if I wasn’t successful in working with the team, there would have been nothing. But if we were successful, there would be a payout. In the first year of a payout – 2009 – I waived my $600,000 bonus. I felt if I did that the court would be more apt to approve the payout for all the other employees. And it did. The total payout for all other employees was roughly $6 million, divided according to level and performance.”

Yeaman waived a second $5 million payment that would have come with the company’s change of control. His compensation – a package worth $6.7 million – must be earned over several years, he says, even though it’s sometimes reported as a single year’s total compensation.

While some sources say the recent labor difficulties reflect growing employee confidence in the company’s viability, Yeaman says Hawaiian Telcom still has far to go to solidify its future. He says it won’t get there without a dedicated team united around strong, central values.

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Comments, page 1 of 2 1 2 Next »
Jan 4, 2012 12:20 am
 Posted by  nobu

"the company has generated $15 million in profit and now has a net worth of $300 million." Can this be because the systems still don't work, jobs out-sourced, reduction in force, etc? Since the company turned a profit, why couldn't part of that profit go toward keeping jobs local, or just keeping jobs period? Maybe fixing the systems the front line employees need to work with? Instead, half of that profit went to the CEO and management bonuses? Par for the course perhaps? Thanks

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Jan 4, 2012 07:06 am
 Posted by  JA4579

@NOBU What jobs were outsourced? I keep hearing this but I've never spoken or interacted with any rep that wasn't based locally.

Jan 4, 2012 01:37 pm
 Posted by  nobu

@JA479-The 411, "0" operators, and company directory operators are now based in SAIPAN. When a pay phone is used (what is that anyway?) your calls to "0" are also routed elsewhere. Thankfully, the customer service reps you speak to are all LOCAL.

Jan 4, 2012 02:58 pm
 Posted by  Janice Okubo

A great person to honor. Eric is a wonderfully humble and gracious man of integrity. As always, great writing by Beverly Creamer.

Jan 4, 2012 07:23 pm
 Posted by  AlohafromMinneapolis!

I am so proud of Eric Yeaman. We were roommates in college while attending University of Hawaii. I knew that Eric would be very successful in his chosen career based on his determination, drive, skills, intelligence, personality, and more importantly, dedication to his work and family. I salute you Mr. Yeaman!

Jan 4, 2012 07:50 pm
 Posted by  john doe

"One of the things I look for, too, was he started at the bottom, picking coffee in the Kona mountains..."

What a horrible thing to say! That is really insulting to farmers. Some people take pride in doing a good job - regardless of the nature of their business. So walter dods thinks picking coffee in kona is the lowliest of jobs? Or did he mean to say something like "...he started at a humble job, picking coffee..."?

Tough one, that. Walter is not usually this careless with words...

Jan 6, 2012 06:13 pm
 Posted by  Dan Canete

He needs to look at his internet business. Hawaii Telcom just lost mine because they do not stock modems locally. They have to ship them from the mainland and it takes 3-5 days. So, I have a business that depends on the internet and cannot afford a 3-5 day downtime. I called Oceanic and was told I could get a replacement the same day. Maybe the light will go on in Eric's head that these things are small enough, he can keep them in his garage. Duh!

Jan 6, 2012 06:42 pm
 Posted by  WeGo

Actually, the modems are stocked locally, shipped to neighbor islands from Oahu, not the mainland. It takes 1-2 business days. If you are on Oahu, you can pick one up at one of the Hawaiian Telcom TV Depots.

Jan 7, 2012 02:38 am
 Posted by  nobu

@Dan Canete-as you can see communication isn't the strong point at Hawaiian Telcom any longer. According to WEGO, obviously HT mgt, modems ARE shipped locally, perhaps you can pick them up at the former HT stores, but where are they? Reps are so busy selling, CUSTOMER SERVICE is a thing of the past (FOR SOME). Front line folks have so much stress placed on them, and such little resources to help, VALUABLE customers like yourself are lost.Believe me there are reps who really CARE.

Jan 7, 2012 02:56 am
 Posted by  nobu

cont@Dan Canete-I can say "keep the faith" but I too have lost faith in this "Local Company". There is no mention in the article about how hard the rank and file worked together to turn this company around. It seems like all the credit was given to yeaman, and he gave no credit to the workers. Oh, he did cut their benefits. LIGHT BULB time, where would you and your management team be if not for the workers doing the work? I so agree with you Dan..DUH on more than 1 count. Thank you

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