Wall Street cheered sneaker giant Nike's move this week to oust Chief Executive Officer John Donahoe, sending the company's shares soaring more than 8% after struggling over the past year amid sluggish sales.
The stock price surge comes as longtime Nike executive Elliot Hill, who left the popular sportswear brand in 2020 but returned as the company's new CEO earlier this week, has sought to encourage staff and boost morale following the departure of his predecessor.
“I know things have not been easy and we have certainly faced our fair share of challenges,” Elliot Hill, who joined Nike as an intern more than three decades ago and rose to become president before retiring in 2020, said in an email to employees on Thursday.
Nike shares rose 6.8 percent to close at $86.52 on Friday and have risen more than 8 percent this week after the Oregon-based company announced Donahoe's resignation on Thursday.
Mr Donahoe, who was hired by Nike after a long career at consulting firm Bain & Co., eBay and software company ServiceNow, made about $104 million in salary and benefits during his tenure as CEO. According to Bloomberg News.
However, under his leadership, Nike's market capitalization has fallen by nearly $40 billion.
Since Jan. 1, Nike's shares have fallen nearly 20% as inflation and tough competition have shrunk the company's annual sales.
Expectations of a shakeup at Nike's top brass grew on Wall Street last month after Bill Ackman's Pershing Square Capital Management revealed it had a significant stake in the company.
Sources close to Mr Ackman have reportedly indicated the hedge fund billionaire supports Ms Hill as Mr Donahoe's successor.
As of Friday, Ackman's hedge fund held 16.3 million shares of Nike. The Washington Post has reached out to Ackman for comment.
In his introductory email, Hill wrote that he has an all-hands meeting scheduled for Oct. 14, the day he will officially take over the reins of the company he's worked for for more than 30 years.
The email news Bloomberg News reported.
Hill emailed employees directly, offering them the opportunity to “ask questions in advance about what's on their mind.”
The email also included a video message in which he told employees they needed to “act with speed and urgency.”
In the video, Hill told employees that throughout her career at Nike, she had “learned to always put the consumer at the center of everything we do, every decision we make.”
He said it was time for employees to “come together and come together as a team.”
Donahoe left after five years at the helm of the company, where he was tasked with expanding Nike's online presence and direct-to-consumer sales.
The plan appears to be working, with Nike on track to surpass $50 billion in annual sales for the first time in fiscal 2023.
But since then, analysts have become more bearish on Nike, now expecting annual sales of $48.87 billion in fiscal 2025.
The bulk of Nike's big payout to Donahoe, who was backed by co-founder Phil Knight, came in the form of $35 million in stock awards to cover the compensation he lost when he left ServiceNow.
Donahoe's compensation put him in the top 0.1% of the top 1% of US CEOs.
Nike has struggled to maintain its market dominance in the face of inflation-weary consumers cutting back on discretionary spending and a slower-than-expected recovery from the pandemic in China.
The company also faces stiff competition in the sports and leisure industry, with rival brands such as Hoka and Roger Federer's On on hot off the presses.
