Wall Street this week cheered Nike's decision to oust its chief executive, John Donahoe, as the sneaker giant's shares, which had been lagging over the past year amid a sales slump, rose 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 chief executive, sought to encourage employees and boost morale following the departure of his predecessor.
“I know things haven’t been easy and we’ve certainly had to deal with many obstacles,” Elliott Hill, who started at Nike as an intern more than three decades ago and rose to become the company’s president before retiring in 2020, wrote in an email to employees Thursday.
Nike shares 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 Thursday that Donahoe would step down.
Donahoe, who was hired by Nike after a long career at consulting firm Bain & Co., eBay and software company ServiceNow, earned nearly $104 million in salary and benefits during his tenure as chief executive. according to Bloomberg News.
However, under his leadership, Nike lost nearly $40 billion in market capitalization.
Since January 1, Nike shares have lost nearly 20% of their value as inflation and tough competition have hit the company's annual sales.
Wall Street's appetite for a change at Nike's top was whetted last month when Bill Ackman's Pershing Square Capital Management disclosed a substantial stake in the company.
Sources close to Ackman had indicated that the hedge fund billionaire was backing Hill as Donahoe's replacement, according to reports.
As of Friday, Ackman's hedge fund had accumulated 16.3 million Nike shares. The Post has requested comment from Ackman.
In his introductory email, Hill wrote that he is planning an all-staff meeting on Oct. 14, the day he will officially take over the reins of the company he has worked for for more than 30 years.
The news in the email was as reported by Bloomberg News.
Hill offered employees the opportunity to email him directly and send “questions in advance with what’s on their mind.”
The email included a video message telling employees to “move with speed and a sense of urgency.”
Hill told employees in the video that over 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, come together as a team.”
Donahoe left the company after five years at the helm, during which he was tasked with strengthening Nike's online presence and direct-to-consumer sales.
The plan appeared to be working, as Nike surpassed $50 billion in annual sales in fiscal year 2023 for the first time in its history.
Since then, however, analysts have turned bearish on Nike, with projected annual sales for fiscal 2025 at $48.87 billion.
A significant portion of Nike's generous pay package for Donahoe, who was backed by co-founder Phil Knight, was tied to stock awards worth $35 million that replaced the salary he lost when he left ServiceNow.
Donahoe's compensation was within the top 0.1% of the top 1% of all U.S. CEOs.
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 a slower-than-expected recovery from the pandemic in China.
The company also faces fierce competition in the sports and leisure industry, with rival brands such as Hoka and Roger Federer's On hot on its heels.
