READING, Pa. -- When Robert Lutz retired as vice chairman of Chrysler Corp. two years ago, he'd never had the chance to be the chief executive officer of a company. So when Exide Corp. needed a chairman and CEO to help it recover from charges of deceptive sales practices, Lutz decided his time had come.
It doesn't sound like a dream job: helping a company shake off charges that it passed off used car batteries as new merchandise to unsuspecting consumers. But the 68-year-old Lutz, who was in retirement for all of five months, had some experience in helping downtrodden companies, having played a key role in Chrysler's revival from its financial doldrums of the late 1980s.
He knew that restoring a company's reputation is never a quick jump-start.
''It's almost got to be rebuilt from scratch,'' he said in a recent interview.
Exide, a top maker of batteries used in cars, boats, tractors and heavy equipment, saw its stock fall more than 90 percent between 1995 and 1998 as the company faced charges that also included financial misconduct. It is also dealing with environmental problems in several states.
Things had looked good for the company under former chief Arthur M. Hawkins after it went public in 1993 and secured the contract to make DieHard batteries for Sears, Roebuck and Co. Revenues ballooned from $1.2 billion in 1995 to $2.3 billion the next year.
Problems soon followed.
Exide paid nearly $2.8 million to settle allegations in Florida that the company regularly passed off used batteries as new ones and violated other consumer protection provisions. No charges were filed in the case, and Exide admitted no guilt in the settlement.
The company also agreed to pay more than $10 million to settle a class-action lawsuit resulting from the battery allegations. Lutz said he authorized the settlement believing the payments would resolve Exide's legal troubles.
But the company is still contending with an investigation by the Mississippi attorney general, consumer-related lawsuits in six states and a legal battle with Sears, which charges that Exide bribed one of its employees.
And an attorney for several smaller retailers in Alabama said that as recently as this year, his law firm's investigators bought used batteries that were sold as new products. The attorney, James J. Thompson Jr., said commission Exide pays to its branch managers gives them an incentive to pass off used batteries as new.
''They're very highly motivated to continue and perpetuate this fraud,'' he said.
Lutz contended that Thompson's investigators are unfairly singling out Exide, but acknowledged he has reason to believe that batteries returned by customers ended up back on store shelves as new items. In most cases, the customer would probably never know that he or she had received a used battery, Lutz said.
''That doesn't make it right, however,'' he said. ''It's still an unethical practice.''
Exide also faces 22 lawsuits in South Carolina blaming it for high levels of lead in the bloodstreams of children who lived near an Exide plant in Greer. The company also bears primary responsibility for a contaminated site in Pennsylvania and decided to demolish a pollution-prone factory in Memphis, Tenn., rather than pay more than $1.4 million in fines and other payments.
And this past week, the company's president, Alan C. Johnson, resigned after eight months to return to his former employer, Federal-Mogul Corp., an auto parts manufacturer. Lutz will also be taking on Johnson's role until a successor is found.
Despite this litany of problems, one securities analyst who tracks the company does not expect Exide's problems to hurt its standing with consumers over the long term because the allegations have drawn only limited attention.
''The battery industry does not have the same sex appeal as Microsoft,'' said Matthew Stover of Salomon Smith Barney. ''It's not the story that's going to raise the ratings for any news organization.''
Since Lutz has settled in as CEO, the company has taken a harder line on the litigation and has won six of the seven deceptive-practices lawsuits it has faced. In the seventh, a jury recommended punitive damages but no compensatory damages, a finding the trial judge threw out as inconsistent.
''Nobody was harmed,'' Lutz said. ''It's a victimless crime because those batteries carried a complete new battery warranty. So if the customer wasn't satisfied, he or she brought it back and got another one.''
While trying to resolve its legal problems, Exide is also trying to build its business. Revenues have fluctuated in recent years, but were up 4 percent in 1999; the company has suffered losses in recent years related to the battery allegations.
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