It looks like the company will soon have a new leader.
Estée Lauder (EL 1.69%) stock moved into positive territory on Monday on news that the long-running corporate succession drama has come to an apparent end. The storied cosmetics company’s stock rose nearly 2% following media reports that its board had selected a new CEO. This rise in stock prices far exceeded the 0.3% rise in the S&P 500 index on the day.
meet your new boss
The Wall Street Journal was one of the publications that spread the news. Citing an unnamed “person familiar with the matter,” the business newspaper reported that Estée Lauder’s board of directors has selected company employee Stéphane de la Faveri to take the reins of the company.
He is seen as the company’s next leader and will succeed current chairman Fabrizio Frida, who has served as CEO since 2009. Frida announced earlier this year that she would be stepping down.
The Lauder family was divided on the issue, according to the Journal’s previous reporting on the succession. Some preferred insiders, while others preferred a fresh outsider. Another issue that divided this influential group was how quickly to appoint the person. Descendants of the founder Estée Lauder still own a large amount of stock and are actively involved in the management of the company.
Estée Lauder has not responded to any media reports about Mr. de la Faverie, and has not officially announced Mr. Frida’s replacement.
Insider benefits
Outsiders can bring a fresh new perspective to a business, but they usually require an adjustment period to get to know the new company and learn its culture. So Mr. de la Faverie, who has been with Estée Lauder for nearly 14 years, probably doesn’t need much (if any) such direction. Therefore, he should be able to get to the new post fairly easily. It’s also obviously a relief to shareholders that the company won’t be plagued by ugly succession disputes.
Eric Volkman has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
