Hammond maps a new course

Takeover attempts woke this 'nice little family company.' New blood, and high technology, will direct it into the nineties.

By Stephen J. Simurda

Five years ago, Caleb Dean Hammond III and Kathleen D. Hammond learned just how important their family business was to them. The lesson came as they realized how valuable their map and atlas company might be to someone else.

A pair of serious, but unwanted, takeover attempts put Dean and Kathy in the uncomfortable position of battling older family members and senior company executives, in order to secure their place as the fourth generation to run Hammond Inc. When it was over, the couple had won control of Hammond's stock and had become its top executives. They did it with a combination of shrewd business strategy and an underlying desire to see the company remain in the family. And they did it without creating any permanent rifts among family members. Still, it all came as something of a surprise.

"Takeovers were never anything I had thought about," says Dean Hammond, the company's 42-year-old president and chief executive. "That's what happens on Wall Street. But a nice little family company nestled among the hardwood trees in Maplewood, New Jersey — that was not reality."

Reality for Dean and Kathy was that they had their hands full trying to reinvigorate a "nice little family company" in which growth and innovation had pretty much skidded to a halt. The company was venturing into new publishing projects, including cookbooks, without much success. "We were holding our own in the map business," says Kathy, 39, "but we weren't really doing anything new there."

With their ambition and youthful energies, Dean and Kathy hoped eventually to guide Hammond to new growth by returning to its roots in mapmaking and by utilizing the latest technologies.

Those roots stretch back to 1900, when Dean's grandfather, Caleb Stillson Hammond, founded the company. As the story goes, Caleb left his job as eastern sales manager for Rand McNally after he was turned down for a $5 per week raise. Rand McNally and Hammond have been competing ever since (see below).

Hammond, which focuses on maps and atlases, has revenues estimated at $100 million a year (although the company will not confirm this) and about 110 employees, all in Maplewood. The company's four areas of business are retail sales, promotional products used by such firms as Time, Newsweek, and Reader's Digest, items for the educational market, and sales to other publishers.

Rand McNally, also a family-controlled company, reportedly has annual revenues of $240 million and 3,000 employees worldwide. These revenues come from a variety of businesses, ranging from the publishing of road maps to the printing of airline tickets.

Dean Hammond was not thinking about how best to compete with Rand McNally when he graduated from college with a business degree 20 years ago. He went to law school in Florida, but after less than two years left to open a bicycle shop with a friend. Dean sold his interest in the shop in 1974 to come back and work for Hammond as its New England sales representative. "I really hated Florida," he says. "It was too hot and flat." By that time, too, he was married to his first wife and had a young son. He wanted more financial security than a small retail shop could provide.

Within a few years, Dean had served Hammond in a variety of roles. In 1978, he married Kathy, a rising star in advertising sales management with the New York Times. Dean tried to persuade her to leave her promising and high-paying career. Kathy resisted for four years, but in 1982 agreed to join Hammond as director of corporate development, a new position that allowed her to troubleshoot throughout the company.

From the beginning, Dean and Kathy expected that eventually they would run Hammond. The couple controlled 9 percent of the company's stock and hoped in time to increase their share. "If both of us were going to devote our energies to building the business," says Kathy, who is now executive vice-president, "then we wanted more than 9 percent, because you just can't have enough of an impact with that low a percentage." In fact, control of the company was held by about a dozen family members who each owned a piece of it. Dean's father, Caleb Dean Hammond Jr. (Bud, to just about everyone), and his uncle, Stuart L. Hammond, each controlled about 30 percent. In addition, although Bud, 74, had stepped out of an operating role several years earlier, Stuart, 67, was president and showing no signs of retiring.

Dean and Kathy were in no great hurry. As Bud's oldest son and the only third-generation member in the business, Dean was likely to acquire Bud's stock eventually. Their long-term plan was to take operating control of the company when Stuart did finally retire.

Circumstances altered that plan considerably. In the takeover spree of the mid-eighties, Hammond was often approached by potential buyers. As a solid publishing company with a steady cash flow and a recognizable brand name, Hammond was of interest to a variety of communications companies, including Capital Cities/ABC and Random House. While Bud, Dean, and Kathy wouldn't consider a sale, the idea of cashing in was appealing to Stuart. When an offer was made for the company early in 1985, he was willing to talk.

The proposal came from Silver Burdett Co., the textbook publisher, now a unit of Paramount Communications Inc. "It wasn't a hostile situation . . . They were making an offer," recalls Dean, who says he and Kathy "decided that it was our need and desire to keep the company private."

Kathy is a bit more direct about the couple's response. "We talked about it and decided, 'Hell no. There's no way the business should be sold at this point.' We felt it had tremendous growth potential, and we wanted to be the ones to realize that growth."

But with their small ownership stake, the couple appeared to have little leverage, especially if they tried to oppose Stuart directly. At the time, Dean was senior vice-president and Kathy, vice-president of marketing. They were key members of Hammond's management team. Kathy also had some knowledge of the takeover game — her first job out of college was as assistant to Carl Icahn. Together, the pair developed a reply to Silver Burdett and went off to see Patrick Donaghy, who was then president of the company.

They explained firmly that they had no intention of selling and would do everything in their power to keep the company in the family. If they could not block the sale, however, they said that it might be in Silver Burdett's interest to keep them on as employees. Donaghy agreed and offered them employment contracts if the sale went through. Shortly afterwards, after the board learned of the offer, the negotiations with Silver Burdett fell apart.

"I think it turned off some of the other stockholders, who felt we would be getting more out of the deal than just the stock price, because of the employment contracts," says Kathy. But, she adds with relish, "That was part of our strategy. We wanted to show that no matter which way the deal went, we were going to win."

This was only the first round, however, and Dean and Kathy knew that as long as their uncle was interested in selling and they owned only a minority interest, they could not stave off a buyout forever. The next threat came only a few months later and was more insidious.

Dean, Kathy, and Bud learned that a nonfamily member of the company's 13-person board of directors had approached a cousin of Bud and Stuart's who held a 22 percent stake in Hammond and was interested in selling. The cousin had apparently agreed to deal with the director who, the Hammonds later learned, was allied with a nonfamily executive in the company. Bud says he suspected that the director hoped to buy the 22 percent and afterwards persuade Stuart to add his stock. Then, Bud maintains, they would plan to sell it. "Stuart was much more interested in selling the business than I was," Bud says.

While viewing all this as a serious threat, Dean knew from his legal training that the company had a good chance of blocking any deal. "It appeared to us that there were things going on at the board level that were not exactly right," he says. Dean let it be known that he felt the director might have violated his fiduciary responsibility to the company by negotiating with a stockholder, apparently on his own behalf.

Then Dean, Kathy, and Bud met with the cousin. "We told her what was happening," says Bud, "and offered her the same price these other fellows had offered." She accepted.

"She told us that all things being equal she'd rather keep the company in the family," Dean explains. But he admits he was willing to play a little hardball. "We had this fiduciary club to hold over her head: that our offer was clean and theirs wasn't," he says. "We told her: 'if they outbid us, you can spend a long time waiting for your money because we'll fight it in court.'"

With the latest takeover foiled, the family still faced the question of what to do to stop future attempts. Dean, Kathy, and Bud acquired additional stock from a couple of other family members who owned minority shares. Together with the 22 percent purchased from Bud's cousin, this gave the three of them a controlling interest. Bud also agreed to rejoin the company as chairman.

Several months later, at a board election in November 1985, Bud, Dean, and Kathy used their control of the company to oust the wily director. The nonfamily executive was allowed to stay, after a stern warning, but resigned 18 months later. As for Stuart, he remained president until his contract expired at the end of 1986, when Dean took over. Stuart was given the new title of vice-chairman and was put in charge of high-level sales to publishers. Today he still denies any involvement in the second takeover attempt. "I've been painted as the person who wanted to sell the company," he says, "but I wasn't [going to agree] unless it was good for all concerned . . . If that meant selling it, that was fine."

Reducing his responsibilities turned out to be a blessing in disguise for Stuart, who had major heart surgery in 1987. He seems comfortable with his new role and remains active as a member of Hammond's four-person executive committee, which includes Bud, Dean, and Kathy. "My mother used to say that everything works out for the best, and it has," Stuart says. In addition, he acknowledges that the direction the company is taking under Dean and Kathy is better left to the new generation. "I'm too old to lead this company into the electronic age," he says.

For Dean and Kathy, electronics is the key to updating and modernizing Hammond. They are in the middle of a four-year project to create a computerized mapping system that will provide greater flexibility to the company's map production and open up new areas of business. For Dean, a tinkerer who spends hours playing with his personal computer at home, it's something the company can't afford not to do.

For all the technology of the nineties, mapmaking remains in large measure a laborious task done almost entirely by hand. Hammond's cartographers take large sheets of paper with just the base outlines of geographic boundaries and add various elements, like rivers, cities, and roads. All those features are now programmed into a computer. What Hammond plans to do is recreate the world inside a computer system and train its cartographers to create overlays at a keyboard.

Suppose a textbook publisher wants a map of northwestern China. In the past, such a request might require the creation of an entirely new map. With the new computer system, Dean explains, "you go to your seamless world database and focus in on what area you want and what scale and what overlays. Do you want major rivers only? Do you want minor tributaries? Do you want reservoirs or not? Do you want roads? To what detail? What color would you like the roads to be? Do you want topography or not?" All of this can now be done by tapping out the instructions at a computer terminal.

Some cartography experts feel the company needs something in its future to provide it with a more competitive product. Tony Naden, a Boston map dealer, for example, says flatly of Hammond: "I don't like their atlases. They have the look of being very simplistic. I think they could use a lot of polishing. It seems to me like the company hasn't been moving forward."

Tom Rohrer, vice-president of The Map Store Inc. in Washington, D.C., isn't quite so critical, but agrees that Hammond has not been a company known for its innovation. "They've pretty much stayed with the same presentation for a very long time," he says.

Both map dealers agree that European firms, such as the Scottish firm Bartholomew, produce better cartography than either Hammond or Rand McNally. Hammond recognizes the quality of Bartholomew's product and has arranged to distribute many of them in the United States, using the Hammond imprint.

While Rand McNally, Bartholomew, and other mapmakers are also entering the computer age, Kathy says Hammond is ahead of them and will be the first company to offer a fully computerized product when it introduces a redesigned world atlas in September 1991. "We have not found a company yet doing computerized database work on a world scale like we are," says Kathy.

She and Dean are so sure about their move into new technology that they've even changed the company's slogan. For years Hammond used the tag: "Mapmakers and publishers since the turn of the century." Now they are "Mapmakers for the 21st century."

If all the ambitious plans pay off for Hammond, it will be largely due to the seemingly effortless collaboration between Dean and Kathy. Their talents and work styles are as complementary as, well, longitude and latitude.

"We have great respect for each other's business acumen and do different things well," says Dean. "She's a stronger administrator and I'm probably a slightly stronger direct-sales person." Kathy agrees that they have different strengths. "I probably tend to be more analytical and he tends to be more intuitive about running the business," she says.

In addition to serving as executive vice-president, Kathy is also chief operating officer, with direct responsibility for the day-to-day management of the company. Dean does more work on high-level sales to major clients.

When asked probing questions about their obvious differences in style, Dean readily smiles. And before his grin fades, Kathy answers the question. Fast-paced and hard-nosed, she sees the distinction clearly: "Dean's got a very relaxed style and I tend to be more intense and focused." Her intensity means that Kathy is more likely to generate enthusiasm among employees and dictate the path they should follow. "She is very good at managing people so that we're all marching in the same direction," says Dean.

At the moment, Hammond is marching ahead in an effort to overtake Rand McNally, which most industry observers agree still holds a slight edge in the map and atlas market. Kathy Hammond, not one for understatement, thinks she knows how it will all turn out:

"We're going to blow them out of the water."

Latitude, the key to this marriage

When Dean and Kathy Hammond first met, each had a little secret and hestiated to tell the other about it.

"I thought she might think it was a little weird," admits Dean. Kathy nods in agreement. After a few dinner dates, each one's secret came out: Both are vegetarians.

When they first decided to work together at Hammond, after four years of marriage, few of their friends had anything good to say about the idea. "All they did was tell us a lot of horror stories," says Dean, who admits he too was a little concerned that he and Kathy would eventually get on each other's nerves if they spent all day together.

"I was less concerned about getting sick of each other,"' says Kathy, "than about having big, disagreements and arguments in the business that would find their way home." So far, they agree, that hasn't happened.

Inevitably, however, work does come home with the Hammonds. They speak often about "compartmentalizing" their two lives effectively, especially for the sake of their two young children and Dean's son from his first marriage.

"There are times when it's okay to talk about work at home," says Dean, "but when you walk in the door and the kids are there and they yell, 'Mommy, Daddy!' and they want to wrestle or play, business is shut off; it's just taboo."

When the kids are asleep, however, the couple often gets down to business conversations that they don't seem to have time for in the office. "A lot of what we do in the evening is talk about long-term strategy" Kathy says. -S.J.S.

That other family mapmaker

If Dean and Kathy are going to make Hammond Inc. number one in mapmaking, they will have to knock off another family company, Rand McNally. The world's best-selling paperback annual is the Rand McNally Road Atlas, that trusted companion for millions of Americans who motor across the United States, Canada, or Mexico. The name Rand McNally is synonymous with maps and atlases. Even Bing Crosby tipped his hat to the name when he crooned: I'm looking for a little uncharted lake where the fishing is so good/ that Rand won't even tell McNally about it.

In truth, there hasn't been a Rand at Rand McNally since the turn of the century. William Rand founded the business as a small Chicago printing shop in 1856. Within a few years he was joined by an Irish immigrant named Andrew McNally, to whom he later sold his interest.

Now based in Skokie, Illinois, Rand McNally today is run by Andrew McNally IV, the 50-year-old president and chief executive who took over from his father in 1974. Andrew McNally III, 80, remains chairman of the board. The McNally family still owns the company, along with what a spokesman called "an insignificant number" of outside stockholders.

Rand McNally's reputation rests largely on its atlases, which compete with Hammond's, and on its road maps, which Hammond has chosen not to make. But the Illinois company is much more diversified than its New Jersey competitor. Rand McNally, for example, is a major force in the financial services and transportation industries. The company's DocuSystems Group is the world's largest printer of airline tickets, supplying about 300 carriers and thousands of travel agents. It also has a division that is a vital part of the trucking industry, supplying information on routing and mileage by computer to dispatchers across the country.

For nearly 80 years, the company has been responsible for assigning the routing numbers that appear on the bottom left-hand corner of personal and commercial bank checks. They are also publishers of the International Banker's Directory, which lists every bank in the non-communist world.

Some have criticized the company for ignoring its leadership role in the cartographic world. These critics had a field day last year when the company published the Rand McNally Photographic World Atlas, which did not include detailed regional maps covering the states of North Dakota, South Dakota, and Oklahoma. Evidently, the editors and marketers felt that travelers were not interested in these states (the book's subtitle is: A Traveler's Portrait of the World). The official explanation, however, was that the company had never intended for the atlas to be inclusive.

For now, Rand McNally remains number one. And even someone from Bismark, Sioux Falls, or Tulsa would have a hard time arguing with that. —S.J.S.