LOS ANGELES – Nike Inc.(NKE) Chief Executive William Perez has resigned following disagreements with founder and Chairman Philip Knight over how to lead the world's largest athletic shoe company, Nike said Monday.
The company said Nike brand co-President Mark Parker will take over from Perez, who steps down after just 13 months with the company and will get more than $8 million in severance, including Nike buying his house from him.
"There had been speculation that there was a disagreement with Perez and Phil Knight, Nike's founder," said John Shanley, an analyst with Susquehanna Financial Group. "But clearly the abruptness of this resignation and the fact that he has only been there 13 months, is certainly something of a surprise. I don't think investors will look on this very favorably."
Investors and analysts have shown concern over increased competition to Nike from the pending merger of Adidas-Salomon and Reebok International Ltd (RBK), slowness in European retail markets and limited success for Nike with recent products in Japan.
But Shanley said he believed it was not those issues.
"I think it is more personality related," Shanley said.
Nike, based Beaverton, Ore., said its board and Perez mutually agreed to end his relationship. Shares of Nike traded at $82.54, down nearly 2 percent, on the Nasdaq Monday.
Nike said Perez's severance would be more than $8 million, including two years' salary at $1.4 million a year and a bonus of at least $1.76 million for 2006. The company said it would also buy Perez's house for $3.6 million, which covers remodeling and furnishing costs.
"Succession at any company is challenging, and unfortunately the expectations that Bill and I and others had when he joined the company a year ago didn't play out as we had hoped," Knight said in a statement.
Nike is still enjoying robust demand within the United States for its shoes and apparel, and it posted a 15 percent jump in latest quarterly profits.
While Perez joined Nike in December 2004 after a long career with consumer products company S.C. Johnson & Sons, worries over his lack of experience in the athletic shoe business have trailed him.
In a statement, Perez said he and Knight "weren't entirely aligned on some aspects of how to best lead the company's long-term growth."
He added: "It became obvious to me that the long-term interests of the company would be best served by my resignation."
Parker, 50, who joined Nike in 1979, will also succeed Perez on the company's board. A company insider and ally of Knight, Parker is known for his work on the Nike Air franchise, among others.
Before running the Nike brand, he oversaw the company's sprawling footwear and apparel businesses.