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Friday, November 19, 2004 - Page updated at 12:00 A.M.
Nike's Phil Knight resigns as CEO
By Anne M. Peterson
PORTLAND Phil Knight said yesterday he is resigning as president and chief executive of Nike but will remain chairman of the world's largest athletic shoe and clothing maker at a time when sales for the "swoosh" logo are growing around the globe.
He will be succeeded by William Perez, head of S.C. Johnson & Son, maker of Glade air fresheners and Drano drain cleaner.
Knight, 66, will remain as chairman of the company's board, the company said.
A former University of Oregon track star, Knight founded Blue Ribbon Sports with Oregon track coach Bill Bowerman in 1968. Knight's first shoes, sold out of the trunk of his car, had soles made on Bowerman's waffle iron.
The company was renamed Nike, after the Greek goddess of victory, in 1972.
Under Knight's direction, Nike has become a $12 billion global business, selling apparel and equipment with an ever wider range of shoes.
He did not give a reason for relinquishing the titles. His resignation is effective Dec. 28.
Perez, 57, president and CEO of S.C. Johnson since 1996, has worked for the consumer-products company for 34 years. Privately held S.C. Johnson, based in Racine, Wis., had $6.5 billion in revenue last year.
Perez also sits on the boards of cereal giant Kellogg and retailer May Department Stores.
He will have direct oversight of a profitable company with steadily growing worldwide sales.
In September, Nike reported a 25 percent increase in first-quarter profit. The company also reported a large rise in U.S. orders, up 11 percent to $1.4 billion, reversing a declining trend in the national shoe market over the last several years.
Under Knight, Beaverton, Ore.-based Nike pioneered athlete endorsements of its products. The company signed basketball great Michael Jordan in 1984, turning him into a brand name with Air Jordan shoes. Along the way it also snagged such big-name athletes as Tiger Woods and LeBron James and made the swoosh one of the most recognized trademarks in the world.
Knight achieved "the intersection of commerce and sport," said Matt Powell, a contributing editor of Sports Executive Weekly, an industry newsletter on the sporting-goods industry. "I don't think anybody understood the power of marketing that Nike did with endorsements. He recognized the credibility of that."
Nike has had its share of critics, including activists who brought attention to working conditions at the company's foreign factories. Nike says it has improved factory conditions and promoted fair-labor practices internationally.
Nike selected Perez, who has run in 11 marathons, because of his experience with international markets, multiple brands and mergers and acquisitions, spokesman Kirk Stewart said. Nike is expanding internationally, where sales surpass the domestic market, while buying other brands such as Converse.
"You can feel the innovative spirit that Phil and his team inspires from product design to retail to athlete partnerships. And I'm a strong believer in 'Just Do It,' " Perez said in a statement.
Knight was a miler for legendary coach Bowerman at Oregon in the early 1960s. At Stanford's business school, he developed a plan to design running shoes in the U.S. and have them manufactured in Asia.
After forming Blue Ribbon Sports with Bowerman in 1968, Nike's first performance shoes were worn by legendary runner Steve Prefontaine at the U.S. Olympic track and field trials in Eugene that same year.
The Knight family Phil and Penny has been copious donors to the university. The Knights put up the money for the renovation of the campus library and the construction of a new law school, named for Phil's father, William Knight. Their contribution to the $90 million expansion of Autzen Stadium was between $50 million and $60 million.
The new $3 million football locker room was built with money from other donors. But in appreciation for Knight's generosity to the athletic department, there is a locker with Knight's name on it and No. 1 jersey in it.
As a company, Nike has contracts to supply uniforms and shoes to many universities, including Washington. The same holds at Oregon, where Nike also took a lead designing the futuristic Duck football uniforms and the school's new signature "O" logo.
Nike shares fell 99 cents to $85 before the news about Knight was released. In after-hours trading, they lost $1 more.
Analysts said the move did not come as a complete surprise.
"It's not like he's going out to pasture," said Bill Young, president of St. Louis-based Buford Dickson Harper & Sparrow, which holds Nike shares. "I don't see anything that's going to change the culture of the success they've been able to build."
The move follows three high-profile resignations at Nike's shareholders' meeting in Portland this September.
At that meeting, the three oldest members of Nike's board stepped down, citing increased scrutiny of the age of company directors among stockholders.
They included 84-year-old John Jaqua, who yesterday called Knight "irreplaceable."
"It means that he will not run the day-to-day operations anymore unless it goes sour, in which case he can ask the board to put him back in. It's a tough job," Jaqua said. "He has had his finger in the pie very solidly. His judgment has been solid on every major decision and I think he's irreplaceable."
Seattle Times sports columnist Blaine Newnham provided background on Knight and the University of Oregon. Some background on Perez and analysts' comments are from Bloomberg News.
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