Ken Melrose took control of Toro Co. in the early 1980s and over a quarter-century turned it into a market leader in outdoor equipment, embracing a new style of leadership along the way.
Melrose died Sunday at 79 of Alzheimer’s disease.
A smart, self-effacing CEO, Melrose led the Bloomington-based company out of near-bankruptcy, through boom-and-bust cycles influenced by weather and onto a diversification path that brought sustained growth and prosperity.
He joined Toro’s marketing department in 1970, was named president in 1981 and made CEO in 1983. He promoted a concept called “servant leadership” that shared credit and profits with employees. Since his retirement in 2005, Melrose donated most of his wealth to health, scholarship and charitable causes.
“The most important thing to him was serving others at Toro and through philanthropy,” Kaye O’Leary, Melrose’s longtime partner, said. “He was remarkably grateful for and humbled by the success that he and others created at Toro.”
Before Melrose became its leader, Toro had blown attempts in the 1970s to diversify beyond lawn mowers and snowblowers.
“Under Ken’s leadership, Toro survived and then thrived, as he built a culture of employee engagement long before it was fashionable,” said Mike Hoffman, who succeeded Melrose as CEO and recently retired from the company.
Melrose’s predecessor was planning a new headquarters for Toro. But when he became CEO, Melrose canceled the new headquarters and also sold the company’s corporate jet.
“He built a values-based culture that continues today,” Hoffman said. “He put his office in the middle of the building surrounded by the people he served. No great window views.”
In 1995, Melrose wrote a book called “Making the Grass Greener on Your Side: A CEO’s Journey to Leading by Serving.”
In another business book, Melrose said, “Servant leadership is … being the water carrier for those who pledge to get their jobs done. It’s taking responsibility when things go wrong and giving credit to others when things go right.”
At Toro, Melrose created an employee stock-ownership plan to give everyone who worked at the firm a stake in its success.
He oversaw its acquisition of Wheel Horse products division from American Motors Corp. in 1986 and the Lawn-Boy unit of Outboard Marine Corp. in 1989. In the 1990s, Melrose drove Toro into the professional outdoor-maintenance market with the purchase of several firms in irrigation and related products.
“He also was supersmart, thoughtful, witty, fun to be with and an incredible mentor and friend,” Hoffman said.
Melrose didn’t shy from sensitive topics, including executive compensation, as he and Toro gained success. He would occasionally spend a day working in a Toro plant.
Melrose’s earnings peaked at $12 million in 2001, mostly through the gain in the value of appreciated stock he acquired through options in the early 1990s, including $500,000 he gave up in cash for stock. He bet on long-term performance and criticized excessive pay to top executives.
“It’s getting out of balance, the money some are making, while employees get 3% raises,” Melrose said in 2002. “Boards and companies need to be more accountable to employees.”
In a Star Tribune column that year, Joe Boll, then a manufacturing engineer with 32 years at Toro, said, “Compared with many CEOs, Ken deserves [his pay]. He turned the company around. He stuck it out. He’s in the plants.”
Melrose ran track and studied math and electrical engineering at Princeton University, where he graduated in 1962. He earned an MBA from the University of Chicago.
Last year, Melrose gave $18.7 million to the Park Nicollet Foundation to expand Melrose Center, a group of HealthPartners clinics that focus on eating disorders. He also put millions into a scholarship fund for Toro employees and an employee-emergency fund.