It appears that Estée Lauder is on the brink of appointing a new leader.
The resolution of a prolonged corporate leadership transition at Estée Lauder is reportedly the reason for the company’s stock surge on Monday. The stock of this renowned cosmetics company rose nearly 2% following media reports that its board of directors had chosen a new CEO. This increase in share price was significantly higher than the S&P 500 index’s rise of 0.3% that day.
Introduction of the new leader
The Wall Street Journal, among other publications, reported on this development. According to unnamed sources familiar with the situation, the financial newspaper stated that Estée Lauder’s board has selected insider Stéphane de la Faverie as the new chief executive officer.
The new leader is expected to succeed the current CEO, Fabrizio Freda, who has held the position since 2009 and had announced his intention to retire earlier this year.
Previous reports by the Journal on this succession indicated a division within the Lauder family regarding the decision. Some members preferred an internal candidate, while others advocated for an external figure. Another point of contention among this influential group was the timing of the appointment. The Lauder family, descendants of founder Estée Lauder, still holds significant shareholdings and remains actively involved in the company’s management.
As of yet, Estée Lauder has not responded to media reports concerning de la Faverie, nor has it officially announced Freda’s successor.
Benefits of internal appointments
While external candidates can introduce new perspectives to a business, they typically need an adjustment period to familiarize themselves with the company and its culture. In contrast, de la Faverie, having nearly 14 years of experience at Estée Lauder, is likely to require minimal orientation. This implies he could assume his new position with relative ease, alleviating shareholder concerns about potential turmoil from a contentious succession.