Wall Street cheered Nike’s move to oust CEO John Donahoe this week as the sneaker giant’s stock, which had been lagging over the past year amid slumping sales, saw a spike of more than 8%.
The stock surge comes as Elliott Hill, a longtime Nike executive who left the popular sportswear brand in 2020 only to return earlier this week as its new CEO, tried to encourage staffers and lift their morale following the departure of his predecessor.
“I know things haven’t been easy, and we certainly have taken our fair share of shots,” Elliott Hill, who started at Nike as an intern more than three decades ago and rose to become company president before retiring in 2020, wrote in an email to staffers on Thursday.
Shares of Nike rose more than 5% after the start of trading on Wall Street on Friday. For the week, the stock is up more than 8% following the Oregon-based company’s announcement on Thursday that Donahoe was stepping down.
Donahoe, who was hired by Nike after a lengthy career at consulting firm Bain & Co., eBay and software company ServiceNow, earned nearly $104 million in pay and benefits during his tenure as CEO, according to Bloomberg News.
Under his leadership, however, Nike lost almost $40 billion in market capitalization.
Since Jan. 1, shares of Nike have shed nearly 20% of their value as inflation and stiff competition has eaten into the company’s annual sales
Wall Street’s appetite for change at the top at Nike was whetted last month when Bill Ackman’s Pershing Square Capital Management revealed a substantial stake in the company.
Sources close to Ackman had indicated that the hedge fund billionaire supported Hill as Donahoe’s replacement, according to reports.
As of Friday, Ackman’s hedge fund amassed 16.3 million shares in Nike. The Post has sought comment from Ackman.
In his introductory email, Hill wrote that he is planning an all-hands meeting on Oct. 14 — the day he will officially assume the reins of the company where he worked for more than 30 years.
News of the email was reported by Bloomberg News.
Hill offered employees an opportunity to email him directly and to send “questions in advance with what’s on your mind.”
The email included a video message in which he told employees they need to “move with speed and a sense of urgency.”
Hill told employees in the video that during the course of his career at Nike he “learned to always put the consumer at the center of everything and every decision.”
He said it was time for employees to “come together, to rally as a team.”
Donahoe exited the company after five years at the helm during which he was tasked with bolstering Nike’s online presence and direct-to-consumer sales.
The plan appeared to be working as Nike exceeded $50 billion in annual sales in fiscal 2023 for the first time ever.
Since then, however, analysts have grown bearish on Nike with annual sales for fiscal 2025 projected to be $48.87 billion.
A significant chunk of Nike’s generous pay package to Donahoe, who had the backing of co-founder Phil Knight, was tied up in equity awards worth $35 million that replaced the pay he forfeited when resigning from ServiceNow.
Donahoe’s compensation was in the top 0.1% of the top 1% of all CEOs in the US.
Nike has been struggling to maintain its market dominance in the face of inflation-weary consumers who have cut back on discretionary spending as well as China’s slower-than-anticipated recovery from the pandemic.
The company is also facing fierce competition in the athletic and leisure industry with rival brands such as Hoka and Roger Federer’s On nipping at its heels.
