Wrigley Hires Ex-Nike Head As CEO

Wm. Wrigley Jr. Co. turned over the leadership of its chewing-gum empire to an outsider for the first time after four generations in the Wrigley family, naming ex-Nike Inc. CEO William Perez on Monday to replace Bill Wrigley Jr. as chief executive after a turbulent past year.

Wrigley will remain chairman of the 114-year-old company, a job he has held along with the chief executive's role since his father William Wrigley died in 1999.

The surprise announcement came as Wrigley reported a 14 percent increase in third-quarter earnings to $148 million, lifted by a sales rise in Asia, to exceed Wall Street's expectations.

The news resulted in the biggest single-day increase in Wrigley's stock in at least 20 years. Shares jumped $6.40, or 13.7 percent, to close at $53.23 on the New York Stock Exchange.

The gum, candy and mint manufacturer's once high-flying stock had declined sharply since last year when it spent more than $1.4 billion to buy Life Savers, Altoids and other businesses from Kraft Foods Inc. — an expensive, debt-funded acquisition that it has struggled to absorb.

Bill Wrigley shook up the top management team in April as Chief Financial Officer Ronald Waters departed, but generating profits from the new businesses has continued to prove difficult.

He said it was solely his idea, endorsed by the board of directors, to bring in another executive to run the day-to-day operations while he focuses on strategy and innovation.

"I will have a greater opportunity to focus on key growth strategies for the company that will drive our global leadership position," Wrigley said at a rare news conference.

"Frankly there's so many opportunities to take advantage of out there that it makes sense to divide and conquer and allow me to work on some of the longer-term growth strategies and some other things, and Bill works on running the company day in and day out."

The 59-year-old Perez lasted barely a year as an outsider CEO at Nike, resigning in January over differences with Phil Knight, the company's co-founder.

Perez previously spent 34 years, eight of them as CEO, at Wisconsin-based SC Johnson, which like Wrigley is a family-owned business that derives more than half its sales internationally. He also will join Wrigley's board of directors.

The executive said he has no concern about a recurrence of the conflict that led to his departure from Nike.

"We will speak to the Wrigley team with a single voice," said Perez, who was first contacted by Wrigley about the job on Aug. 8. "We have a very clear understanding of how we're going to operate."

Perez also said it's unfair to assess the Kraft acquisition, which was announced in November 2004, in so short a time and believes both Life Savers and Altoids are great businesses.

Industry observers voiced optimism he will be able to handle the role better at the world's largest chewing-gum manufacturer, working under a different billionaire chairman, after failing to fit into the culture of the biggest athletic shoe maker.

"An executive of Bill Perez's stature, with knowledge of the consumer markets and dealing with family-controlled companies is hard to find," said John McMillin of the Prudential Equity Group in a note to investors.

He suggested the choice of Perez may signal an interest in more deals ahead for Wrigley, which in 2002 narrowly failed in a bid to buy Hershey Co. for $12.5 billion.

Morningstar analyst Mitchell Corwin called the CEO switch a good move that should give investors more confidence.

"The missteps with the Kraft acquisition and heightened competitive environment demonstrated that the company could use a seasoned veteran to run the day-to-day operations," he said. "I think Bill Wrigley had the right strategic vision for the company, but acquisitions can be difficult and the competitive environment is more intense today than it's ever been."

Wrigley's products include gum and candy under the brand names Wrigley, Altoids, Juicy Fruit and others.

It was founded in Chicago in 1892 by William Wrigley Jr., who got his start giving away chewing gum to merchants as an inducement to buy his soap and baking soda. His great-grandson Bill, who was thrust into the company's leadership at age 36, has maintained the company's relatively low public profile while more than doubling its sales. He is credited with pushing the firm to be more innovative and introduce more products — a strategy that ran into trouble with the Kraft deal.

"This isn't a sad moment for me," Wrigley said at his Chicago news conference. "I'm energized by this" and by getting the opportunity, he said, to focus more on strategy and be a more active chairman.

No other Wrigley family members are involved in the company's business operation. He said the choice was made to go outside the company for a new CEO because Perez is a "unique fit and brings in some tremendous skills."