Carol Tome has swapped a gardening spade for drones. She retired as CFO of Home Depot in 2019, but in 2020, the UPS board begged her to come out of retirement to lead the company through the pandemic. She has not been disappointed with UPS performing strongly during the pandemic (UPS: NYSE).
Carol was no stranger to the UPS board. She had been a board member since 2013, so the board was aware of her abilities.
What stood out to them? Her experience and her empowering leadership style.
“You learn a lot when you’re on a pair of skis going 60 miles an hour down a hill.”
Caroll grew up in the small town of Jackson, Wyoming. Her parents taught her to hunt, fish, ski, cook, and sew. But most of all, they taught her the joy of learning, which made her the experienced CEO she is today.
For example, after working in the banking industry for several years, she got an offer to work for a client. It was a big mining company that was in Chapter 11 bankruptcy. Many would have refused the proposal outright, but Carol saw an opportunity for growth.
The company came out of bankruptcy, and Carol worked on many international acquisitions for the company. This is something that now stands her in good stead for UPS. It is also how she got headhunted for Home Depot. They were looking to expand overseas for the first time and needed help.
In 2001, she became CFO of Home Depot. She held this position until her retirement in 2019.
At Home Depot, she worked under five different CEOs. Many would have felt overlooked, but Carol saw it as an opportunity. It gave her valuable experience.
She saw the company grow fast then stumble during the 2000 recession.
As CFO, she was pivotal in steering the company through the 2008 recession.
“I would look at one thing every day. It wasn’t the stock price. I would look at cash. I could tell by cash how we were doing, every single day.”
She also saw a winning culture with the founders – the “inverted pyramid.” And what happened when a new CEO had good ideas but didn’t fit the culture (Robert Nardelli from GE).
Carol Tome has brought the “inverted pyramid” to UPS. The inverted pyramid is all about servant leadership. Putting the customers and frontline staff first while the leadership team and CEO carry the responsibilities and empower those above them.
“To impact people, help them get to their highest potential. I view that as job number one.”
Within a short time of being CEO, Carol was rolling up her sleeves and talking to staff and customers on the frontline. She also made safety a big priority.
“I learned that nearly all of the strategic questions facing a company can be found by listening.”
The most significant change she has brought to UPS so far was her decision to speed up a project focused on making deliveries faster. The project was initially slated to be completed by June 2021. After talking to customers and staff, Carol realized it was more important to complete sooner because the only barrier was money. It was finished in October 2020.
“We’re making UPS better, not bigger.”
So far, she has the golden touch.
Revenue was up 13.4 percent and 15.9 percent in Q2 and Q3, respectively. The pandemic has led to an increase in retail deliveries. UPS is also involved in the distribution of the coronavirus vaccines. The recent upward trend in annual revenue is not in danger (see chart below).
The share price is also up 61 percent since Carol took over. The market is liking the increase in revenue and Carol’s focus on the business and capital returns. A former CFO is someone who speaks their language.
The share price fell slightly in October but has slowly moved back up towards the October resistance level. A bearish harami for the latest week suggests that the share price is not ready to break through the October resistance level just yet (see chart below).