Sneakernomics: Nike CEO: Who’s Got Next?
Nike announced Tuesday “actions that will provide long-term stability in the ownership and governance of the company” including transfer of ownership of Phil Knight’s shares to a LLC called Swoosh. Knight and the Board of Directors also announced a succession plan to select Nike’s next Chairman. Knight recommended Mark Parker, Nike’s President and CEO since 2006, succeed him as Chairman. The Company also named filmmaker Travis Knight, Knight’s son, as the newest member of Nike’s Board of Directors.
Phil Knight, the co-founder of Nike, has been at the helm of Nike for most of the last 40+ years. The company, which started by selling shoes out of a car trunk at track meets, is now a $ 30 billion juggernaut. Nike was recently selected as the “most valuable brand in the world”.
Control of the company
The transfer of Knight’s stock ensures continued control of the company. Swoosh now owns 75% of the Class A shares, which control the voting rights in selecting the board of directors and other important fiduciary matters.
Parker in charge
Parker remains in charge of the company, as he has since 2006 after the well-publicized William Perez mutiny. Since Parker took over as CEO, Nike sales have doubled, profits have grown and share price has soared. Nike Stock recently closed at an all-time high.
According to my analysis of the NPD Group’s 2015 to date POS tracking data, Nike Inc. (Nike Brand, Brand Jordan and Converse combined) controls 62.7% of the US sneaker business, an increase of 200 basis points over the same year ago period. The US is the world’s largest sneaker market and strongly influences the rest of the planet. Nike is not as dominant internationally but still is the largest sneaker brand in nearly every country. The dominance can likely be traced to Parker’s leadership.
Knight’s succession plan is really a culmination of an orderly transition that began in mid-2013, with the retirement of then Nike brand president, Charlie Denson. Denson was replaced by then marketing chief Trevor Edwards. At the same time, Gary DeStefano, head of Global Sales Operations was replaced by the very capable Elliott Hill as President of Geographies and Sales. Erik Sprunk was appointed Chief Operating Officer.
Finally it was announced that CFO Don Blair would retire in August of 2015, replaced by Andrew Campion.
With the expected Parker appointment in 2016, the transition will be nearly complete.
Who’s Got Next?
The only remaining question is who will replace Parker as CEO? Given Nike’s history, we can expect the candidate to come from within. Edwards, Sprunk and Hill are all obvious candidates. Whoever is selected will face the challenge of continuing the legacy of Knight and Parker, and to keep the sales growth coming.
It is unlikely that a serious challenger to Nike’s dominance will emerge.
Sports Industry Analyst at The NPD Group
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