--Avon taps Johnson & Johnson veteran Sherilyn McCoy as next CEO
--McCoy to replace Andrea Jung, who remains as executive chairman
--Appointment comes as struggling Avon defends itself against buyout bid
(Rewrites 1st paragraph and adds analyst comment.)
By Paul Ziobro and Peter Loftus
Avon Products Inc. (>> Avon Products, Inc.) tapped Johnson & Johnson (JNJ) veteran Sherilyn S. McCoy as its next chief executive to steer the company through a turnaround and navigate a buyout bid from a smaller but determined rival.
The selection of McCoy, a highly regarded executive who was a candidate for the top spot at the health-care giant, is seen as a strong sign that Avon and embattled CEO Andrea Jung continue to dig in their heels against the $10 billion buyout disclosed last week by the fragrance giant Coty Inc.
"This is likely a clear sign that [Avon's] Board (and Ms. Jung) is actively resisting Coty's acquisition offier," Bernstein analyst Ali Dibadj said in a note Monday.
The New York consumer products company is turning to McCoy to succeed Jung, who will remain as executive chairman once McCoy takes over as CEO on April 23.
Avon has faced deep investor dissatisfaction over the past year as it failed to deal quickly with poor results in important overseas markets as well as a messy federal probe into allegations of bribery of officials overseas. Jung agreed to step down from the top job in December following an investor outcry over the company's poor financial results.
"Given her consistent record of outperforming against new challenges, we have great confidence that under Sheri's leadership, Avon can successfully execute against out long-term prospects," said Fred Hassan, lead director of Avon's board.
McCoy also will join Avon's board. Avon shares fell 2.9% premarket to $22.75 after jumping 21% last week in light of Coty's bid.
The 53-year-old McCoy has spent 30 years at Johnson & Johnson, most recently serving as a vice chairman on the company's executive committee, responsible for the company's consumer and pharmaceutical divisions. There, she oversaw consumer brands such as Neutrogena, Aveeno, Lubriderm, Clean & Clear and ROC.
McCoy's inexperience, however, in the direct-selling business and in the number of problems plaguing Avon also leave her a steep learning curve, Bernstein says, meaning that her turnaround plan may be a longer time coming than previously thought. Anything sooner might seem rushed or still bear the mark of Jung, whose credibility with investors is tarnished after recent miscues.
Until earlier this year, McCoy was believed to have an edge in getting the CEO post at Johnson & Johnson. She and Alex Gorsky were named to an executive committee in late 2010, creating a two-person succession race that McCoy ultimately lost. When Gorsky was named the next CEO in February, the company said McCoy would report to him when he assumes the post April 26.
Her performance in 2011 was praised by J&J's board, which cited accomplishments such as the pharma unit exceeding its sales and profit targets and the launch of several new products, according to J&J's proxy statement.
But her experience overseeing the consumer unit was more challenging. The board said that under McCoy's leadership, the McNeil over-the-counter medicine division made progress during 2011, fixing the problems that have led to a series of product recalls over the past two years. Recalls , though, continued during 2011 and into 2012. Overall, consumer unit sales were below target for 2011, though profits hit the mark.
McCoy had been with J&J since 1982, when she started as a research scientist. She rose within J&J's research division and then began leading various J&J franchises until taking over the pharma group in 2009. Her base salary was set at $932,400 for 2012. Overall compensation for 2011, including bonus and equity awards, was valued at $8.7 million.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; [email protected]
--Nathalie Tadena contributed to this article.