The apparent end of a long-running corporate succession saga was the news driving Estée Lauder(NYSE: EL) stock into positive territory on Monday. The storied cosmetics company's stock rose nearly 2% on media reports that its board of directors had selected a new CEO. That share price increase was notably higher than the S&P 500 index's 0.3% rise on the day.
Meet the new boss
The Wall Street Journal was one of the publications disseminating the news. Citing unnamed "people familiar with the matter," the financial newspaper wrote that Estée Lauder's board has selected insider Stéphane de la Faverie to take the reins of the company.
The apparently incoming leader will replace the current man in the chair, Fabrizio Freda, who has served as CEO since 2009. Earlier this year Freda announced he would retire.
According to the Journal's earlier reporting on the succession, the Lauder family were divided on the matter. Some had favored a company insider, while others preferred a fresh presence from the outside. Another issue dividing this influential group was how quickly to appoint that person. A clutch of founder Estée Lauder's descendants still has substantial shareholdings and is actively involved in managing the company.
Estée Lauder has not responded to any of the media reports about de la Faverie, and it has not formally announced a successor to Freda.
The advantages of insiders
While outsiders can bring a refreshingly new perspective to a business, they usually require a period of adjustment to get to know their new company well and learn its culture. So de la Faverie, with his nearly 14 years at Estée Lauder, probably doesn't need much (if any) such orientation. He should therefore be able to take up his new post fairly easily; also, it's clearly a relief to shareholders that the company won't suffer from an ugly succession fight.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
