Nike CEO resigns amid clashes with founder

Nike chief executive William Perez has resigned following disagreements with founder and chairman Philip Knight over how to lead the world's largest athletic shoe company, Nike said today.

The company said Nike brand co-President Mark Parker will take over from Perez, who steps down after just 13 months with the company and will get more than US$8 million ($11.83 million) in severance, including proceeds from Nike's purchase of his house.

In a call with investors, Knight said that Perez's long background in packaged goods at S.C. Johnson & Sons led to his "failure to get his arms around" Nike's business. The differences in culture and industries that Perez confronted led to management confusion and the company operating at 80 per cent efficiency, Knight said.

"The distance between the companies that Bill managed in the package goods business and Nike and the new athletic equipment business was too great for him to make that leap," Knight said.

John Horan, publisher of industry newsletter Sporting Goods Intelligence, said Nike's culture has always been unique even within the athletic gear industry.

"You can't overestimate the unique culture that Phil's created there," Horan said.

"That's obviously the whole issue here."

Analyst John Shanley of Susquehanna Financial Group said "the abruptness of this resignation and the fact that he has only been there 13 months is certainly something of a surprise. I don't think investors will look on this very favourably."

But Nike shares dipped just 75 cents, or less than 1 per cent, to close at US$83.45 on the New York Stock Exchange.

Nike said Perez's severance would be more than US$8 million, including two years' salary at US$1.4 million a year and a bonus of at least US$1.76 million for 2006. The Beaverton, Oregon-based company said it would also buy Perez's house for US$3.6 million, which covers remodeling and furnishing costs. Nike's board and Perez mutually agreed to end his relationship, it said.

Parker, 50, an insider who joined Nike in 1979, will succeed Perez on the company's board. An ally of Knight, Parker is known for his work on the Nike Air franchise, among others. Before running the Nike brand, he oversaw the company's sprawling footwear and apparel businesses.

Although Parker said on the investors' call that the company's strategic direction would not change significantly, Horan said he saw Perez's resignation as a "a victory for the Nike brand versus the Nike Corp."

"Perez was really there to help maximize what was going tolack of continuity" by staying the course in appointing a new CEO as opposed to Knight taking back the reins of the company.

Investors and analysts have shown concern over increased competition to Nike from the pending merger of Adidas-Salomon and Reebok International Ltd, slowness in European retail markets and Nike's limited success with recent products in Japan.

But Nike is still enjoying robust demand within the United States for its shoes and apparel, and it posted a 15 per cent jump in latest quarterly profits.

Charlie Denson, also a 27-year veteran of Nike who served as co-president of the Nike brand with Parker, will now become the division's president.

- REUTERS