By Craig Karmin
The chief executive officer of Starwood Hotels & Resorts
Worldwide Inc. abruptly resigned on Tuesday, following months of
behind-the-scenes quarreling with shareholders and board
members.
Frits van Paasschen, who held the top job since 2007, came under
fire in recent months for failing to grow the number of hotels in
the Starwood system through franchise or management agreements, as
fast as the company wanted, board chairman Bruce Duncan said on a
Tuesday analyst conference call. He called the resignation a
"mutual agreement."
Mr. Duncan also said the company wanted to step up the pace of
selling the properties still owned by Starwood, and he wanted the
next CEO to do more to "increase value for shareholders."
Starwood's stock returned 10% over the past 12 months, including
dividends, which lagged behind returns of 30% or more by rivals
like Marriott International Inc. and Hilton Worldwide Holdings
Inc.
"Shareholders had become very frustrated," said David Loeb, a
hotel analyst for the financial firm R.W. Baird. "They seemed to
decide his leadership wasn't working for them."
Adam Aron, a Starwood director since 2006 and a hospitality
veteran, is taking over as interim CEO while Starwood looks for a
permanent successor.
The disagreements with the board "came to a head" over the
weekend, Mr. Duncan said on the conference call, though he declined
to elaborate.
"This is not about strategy change," Mr. Duncan said on the
call. "This is all about execution."
The change in leadership comes a week after Starwood announced
plans to spin off its vacation ownership business to take advantage
of growth opportunities in the timeshare industry. Starwood shares
rose 6.6% that day.
But analysts said the move might have come too late for Mr. van
Paasschen, and that it wasn't clear what his role was in
orchestrating the spinoff.
Mr. van Paasschen had no hospitality experience but came to the
top job with a marketing background. He was head of the Coors unit
at Molson Coors Brewing Co. He was also a big fan of technology,
and under his reign, Starwood was the first major lodging company
to test using a mobile phone as a room key. But analysts said his
relative lack of industry knowledge and operational experience may
have cost him.
Mr. Duncan said that the new CEO would have a different resume.
"We are looking for someone with hospitality experience," he said
on the call.
Write to Craig Karmin at craig.karmin@wsj.com
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