By Sara Germano And Joann S. Lublin
Phil Knight has laid the groundwork for his exit from Nike Inc.,
the company he started by selling shoes out of his car trunk in the
1960s and built into the world's biggest sportswear maker with $30
billion in revenue.
Mr. Knight endorsed the current Nike chief executive, Mark
Parker, to succeed him as chairman next year, the company said. The
chairmanship would be in addition to Mr. Parker's job as CEO.
Mr. Knight also has transferred most of his supervoting Class A
shares to a separate company controlled by its own board. And Mr.
Knight's son, Travis, was appointed to the board.
"Nike has always been more than just a company -- it has been my
life's passion," Mr. Knight, who is 77 years old, said in the
release. "For myself, I intend to continue to work with Nike and
look forward to contributing to its future well after my
chairmanship ends."
Nine years ago, Mr. Knight handed day-to-day management of Nike
to Mr. Parker, after his previously anointed successor, William
Perez, an outsider with little experience in footwear, left after
13 months.
Mr. Parker's tenure has been more successful: Sales have doubled
and Nike's stock has steadily climbed giving the sportswear maker a
market value over $90 billion. Nike is by far the leading
sportswear maker in the world, with almost twice as much revenue as
main rival Adidas AG.
When Mr. Parker took over as CEO, he had worked for the company
for 27 years as a designer. A hard-core runner, he is credited with
helping bring to market sneaker technology like Nike Air. As CEO,
he has helped lead the company's global expansion and its push into
women's wear, while coping with pressures on supply chain
management and rising competition from upstarts like Under Armour
Inc.
Mr. Knight's succession plan comes amid changes at rivals. At
Nike's main competitor, Germany-based Adidas, a search is under way
to replace longtime chief executive Herbert Hainer, whose current
contract expires in 2017. Adidas last year fell behind Under Armour
in combined retail sales of sports apparel and footwear in the
U.S., which comprises the lion's share of global sportswear
sales.
Under Armour, for its part, issued a new class of nonvoting
shares in June to preserve the voting control of its founder and
chief executive, Kevin Plank.
Succession hasn't been easy for Mr. Knight, who has long been
considered the face and personality behind Nike, which he
co-founded with the late University of Oregon track and field coach
Bill Bowerman in the 1960s.
A prior attempt in the 1990s to hand day-to-day control to Nike
veteran Tom Clarke ended with Mr. Knight stepping back in to stop a
slide in sales.
Even after outlining the succession plans, Mr. Knight remains
interested in having a nonvoting position on the Nike board after
he steps aside as chairman, according to a regulatory filing.
He is currently healthy and active in Nike's affairs, according
to a company spokesman.
Mr. Knight created a new entity, Swoosh LLC, to hold most of his
shares representing 15% of Nike's total shares outstanding. Swoosh
will have the power to elect 75% of Nike's board. The five members
of its board each have a vote.
Mr. Knight initially holds two votes while Mr. Parker and two
Nike independent board members each hold one.
Using a separate entity to hold most of his controlling stake,
Mr. Knight has taken an unconventional approach to estate planning,
said Jon J. Masters, a principal at Masters-Rudnick &
Associates, a governance consultancy. Founders often pass control
of their shares to family members.
Mr. Knight's son, Travis, 41 years old, was appointed to the
Nike board effective immediately.
He runs an animation studio called Laika LLC that has worked on
feature films including "The Boxtrolls" and "ParaNorman."
Write to Sara Germano at sara.germano@wsj.com and Joann S.
Lublin at joann.lublin@wsj.com
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