In a move applauded by Wall Street, Smith International said Thursday that Jerry W. Neely has resigned as chairman and chief executive of the Newport Beach oil tool manufacturer, which recently emerged from 20 months of bankruptcy proceedings.
Neely, 51, blamed by many oil industry observers for much of the company's financial difficulties, stepped down Wednesday as chief executive, a position he had held since 1976. He also relinquished his responsibilities as chairman, a position he assumed in 1978.
"Neely stated that having culminated a 22-year career with Smith by successfully steering the company through bankruptcy, he had decided to relinquish these offices but will continue to serve as a consultant and director," the company said.
Neely was unavailable for comment.
Succeeding Neely as Smith's chief executive is H. Moak Rollins, a co-founder of Drilco Oil Tools, which merged with Smith in 1967. Rollins is a large Smith shareholder, with 140,000 shares, about 1% of the company's stock.
Rollins, president of an Austin financial analysis consulting firm and former chairman of the Texas Public Utility Commission, served on a shareholders committee while Smith was in Chapter 11 bankruptcy reorganization. He joined the company's board in April.
"I am a major shareholder, and this is a major piece of my personal endowment, and I want to be here to help take care of it," Rollins, 66, said of his increasing involvement in Smith's business affairs.
"It is not a strange world for me," he said. "Most of the people and all the products and product concepts are familiar to me, and I have obviously followed the company very closely. . . . Our primary concern right now is to be sure we will fulfill the plan of reorganization that was approved by the bankruptcy court."
Other title changes were announced by Smith, although company officials said they simply reflect the management configuration in effect during the reorganization proceedings, which concluded Nov. 12. The reorganization becomes effective Dec. 31.
Doug Rock, previously a division president, has become president and chief operating officer. Loren Carroll, previously a vice president, will become executive vice president and retain the position of chief financial officer.
The board also created an executive committee consisting of Rollins, Rock, Carroll and two outside directors, Frank Benevento, executive vice president of Robert E. Torray & Co., and Robert Sutherland, executive vice president of Industrial Equity (Pacific) Ltd. Torray & Co. and Industrial Equity are Smith's largest shareholders.
Bryan Dutt, an oil industry analyst with Howard, Weil Financial Corp. in New Orleans, said the stock market perceived Neely's resignation as "very favorable."
He noted that Smith stock closed at $7 per share Thursday, up 87.5 cents for the day, although the Dow Jones Industrial Average posted a decline.
Several oil industry analysts applauded Neely's resignation, which they said appeared to have been encouraged by the new board formed when Smith emerged from bankruptcy last month. Company officials, however, maintained that the change of command was voluntary.
Carroll, the chief financial officer, said he wasn't surprised by Neely's resignation. Neely had been under "tremendous stress and pressure," he said, while trying to guide the company through "the most difficult times" during its reorganization.
"I understand why he would want to step down from his responsibilities," Carroll said.
Neely, son-in-law of company founder H.C. Smith, joined the firm in 1966 as a plant manager and rose rapidly through management ranks.
"I think quite honestly that Jerry was there because he was a member of the family. . . . He is not regarded as one of the more imaginative and effective leaders in the industry," said an oil industry analyst who has followed the company for many years.
Analysts acknowledged that Smith's financial difficulties were caused in part by a worldwide downturn in drilling activity caused by plunging oil and gas prices.
But they blame Neely for a stubborn and costly hostile takeover bid for Gearhart Industries of Fort Worth, Tex. Neely wanted to incorporate Gearhart's high-technology devices for detecting oil and gas deposits into Smith's drilling tools.
In the end, Smith and Gearhart announced a settlement under which Smith sold the 33% interest it had acquired in Gearhart. Smith was able to recover only about half of the $163 million it had paid for the Gearhart shares.
Wall Street analysts also said Neely, described by one analyst as having "ruled Smith with an iron fist," was responsible for starting a legal action that resulted in a Los Angeles judge's awarding a $205-million judgment against the company for infringing on a drilling seal patent owned by Hughes Tool Co., Smith's archrival.
The judgment forced Smith to seek protection from creditors under Chapter 11 of the federal bankruptcy code in March, 1986.
In June, 1987, shortly after Baker International merged with Hughes Tool to become Baker Hughes, the combined firm agreed to accept a $100-million settlement in lieu of the $205 million.