The other shoe dropped in the Estée Lauder Cos. Inc. management succession drama Friday morning, when Leonard A. Lauder declared that he plans to step down as chairman in two years and take on the role of chairman emeritus, clearing the way for...
The other shoe dropped in the Estée Lauder Cos. Inc. management succession drama Friday morning, when Leonard A. Lauder declared that he plans to step down as chairman in two years and take on the role of chairman emeritus, clearing the way for his son William Lauder to take over.
"I certainly hope William can succeed me as chairman," Leonard Lauder told shareholders at the firm's annual meeting at Manhattan's Essex House, referring to his son and the firm's current president and chief executive officer. Following the meeting, Leonard Lauder said he has held the chairman post for 12 years, about the same period of time that Estée Lauder, his mother and the company's founder, had occupied the role. In 2009, Leonard Lauder will be 76 years old and wrapping up a career of hands-on management that spanned 51 years.
The announcement comes on the heels of the news that the family-run beauty firm has reached beyond its surname and outside the world of prestige beauty to recruit Fabrizio Freda, until recently president of the Global Snacks division of Procter & Gamble Co., as the beauty group's next president and chief operating officer, with plans to promote him to ceo within 24 months. If all happens according to these plans, Freda and young Lauder will be working in tandem as ceo and chairman.
At Friday's meeting, William Lauder said of his planned successor, "He will be a strong partner with me as we continue to drive profitable growth."
"Lauder needs an operating culture and what company has a better operating culture than P&G? Freda's appointment is a step in the right direction," said Bear Stearns analyst Justin Hott. He cautioned, however, that two years is a long time to wait for a change at the top, given the operational difficulties that the firm has weathered during the past few years.
Hott wrote in a research note Friday, "Hiring an outsider will be perceived as an admission that Estée will focus more on operational improvements than family legacies. In addition, Mr. Freda's P&G background should foster the belief that someday P&G could acquire the company."
In an article that appeared on page 1, Friday, William Lauder dismissed speculation of an eventual sale, the same stance that his father has adopted on more than one occasion.
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