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Colgate Announces Eventual Successors, Stock Reacts

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Colgate’s management shuffle

On March 29, Colgate-Palmolive (CL) promoted two company veterans as the eventual successor to the current CEO (Chief Executive Officer), Ian Cook. The two veterans are P. Justin Skala and Noel R. Wallace, who are now the front runners to succeed CEO Ian Cook.

Ian Cook has run Colgate-Palmolive for nine years and is expected to step down within the next five years. P. Justin Skala and Noel R. Wallace will assume chief operating officer roles starting Friday, according to a regulatory filing by the company. After this news broke in the market, Colgate’s stock price rose by ~1% to $70.51 on March 29, 2016.

Colgate Announces Eventual Successors, Stock Reacts

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Stock price reaction versus peers

Colgate’s stock seen volatility since January 2015. Then the stock fell by almost 12.6% to $60.37 on August 25, 2015, from $69.08 on August 5, 2015. However, it was able to sustain some of its gains until October, when it reached $69.23. Overall, Colgate’s stock has risen by only 2.4% since January 2015.

Similarly, the stock prices of Kimberly-Clark (KMB) and Clorox (CLX) also increased by 17.4% and 23.2%, respectively, since January 2015. The benchmark S&P 500 Index (SPY) (IVV) (VOO), by comparison, rose by 0.3% during that period. Procter & Gamble’s (PG) stock price has fallen by 8.6% since January 2015.

Between 1994 and 2014, Colgate’s stock was considered as a steady performer. The stock rose by more than 800%, and S&P 500 index tripled between 1994 and 2014. Notably, CL made up 2.0% of the First Trust Capital Strength ETF (FTCS) as of March 31, 2016.

Role involvement

According to reports, in their new roles, Skala will look after North America, Europe, and Africa operations in addition to global sustainability while Wallace will be in charge of the company’s Hill’s pet food line in addition to global innovation and growth.

Apart from these changes in the company, Colgate is also focusing on progressive growth. We’ll discuss this further in subsequent parts of this series.

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