Nike Inc. ousted beleaguered chief executive John Donahoe and brought longtime executive Elliott Hill out of retirement to restore the struggling athletic brand to its glory days.
Hill, 60, joined Nike in 1988 and served as president of consumer and marketplace before retiring in 2020. He will take over on October 14. Donahoe, 64, will retire on October 13 and will remain an adviser at Nike through January 31.
Nike (NKE) shares jumped as much as 11% in extended New York trading. The stock fell 25% this year through Thursday’s close.
The sportswear company’s sales have dropped as consumers have grown tired of its lifestyle sneakers. Nike lost ground to upstart athletic brands such as On and Hoka, as well as more established rivals like Adidas.
Layoffs that impacted 2% of its workforce and a $2 billion cost-cutting plan dented morale and left employees questioning if Donahoe was the right person to meet the moment. He has been on the hot seat since Nike slashed its revenue forecast in December and warned in June that sales for the new fiscal year would be below expectations.
“We are all aware we have faced challenges in the past year, but our foundation remains extremely strong,” Chairman Mark Parker said in an employee memo viewed by Bloomberg News. “Now more than ever, we need to come together to accelerate and fulfil our potential to build what’s next for Nike Inc.’s growth.”
Investors will be looking for the new regime to speed up product development and release more of the groundbreaking sneaker technology that once defined the brand. Over the past year, Nike has found itself lacking enough new exciting products to cycle in and keep shoppers interested.
“A new CEO changes the dynamic for the upcoming analyst day and we believe breathes new life and hope into a semi-abandoned blue-chip company in an environment where investors are looking for exactly that,” Simeon Siegel, an analyst at BMO Capital Markets, said in a note to clients, referencing the Nov. 19 investor event.
Barclays analyst Adrienne Yih wrote said the change was “largely expected” and is “a positive development given the company performance.”
Hill had been part of a coterie of former Nike executives that advised Donahoe while he was CEO, according to a former employee who was unauthorized to speak publicly on the matter. Hill, who has had a long-standing relationship with cofounder Phil Knight, had previously been floated as a potential successor to Parker back in 2019 before Donahoe was officially named CEO.
In the company’s statement announcing the change, Parker noted that he has worked with Hill “for more than 30 years.”
Hill, who studied kinesiology and sports management, worked as an athletic trainer at Texas Christian University and the Dallas Cowboys. He started a baseball club in Austin after retiring from Nike.
Hill is set to receive a base salary of $1.5 million as CEO, while he could receive annual bonuses of 200% of that amount for meeting targets, according to a filing. The company also offered him a yearly target long-term incentive award of $15.5 million, and he’ll receive a one-time cash payment of $4 million and equity valued at $3 million.
