Fabrizio Freda Talks Succession Planning at The Estée Lauder Cos.
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Despite speculation about who could lead The Estée Lauder Cos. next, Fabrizio Freda, the chief executive officer for the past 13 years, stressed that he’s not going anywhere.
Answering a question about succession planning and the transition process at the cosmetics giant at the Morgan Stanley Global Consumer and Retail Conference in New York Wednesday in the wake of the retirement of some other senior executives, Freda, who is 65, said he is “completely committed to continue leading this company for the foreseeable future.”
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“There is no plan from my angle to enter a transition period. We are, by the way, in the middle of the big business transition out there. There is a lot of evolution issues around the world,” he continued. “It’s a very exciting moment, but also very important moment. And I’m completely committed to this company. I believe we have created one of the best companies in consumer goods with an extraordinary opportunity for the future.”
As well as its multibillion-dollar acquisition of Tom Ford, its first foray into fashion, Lauder is grappling with COVID-19 lockdowns in China, which weighed on business in the most recent quarter, forcing it to lower its full-year forecasts.
Full-year net sales are forecast to decrease between 6 percent and 8 percent in the 2023 financial year, down from its previous forecast of growth of 3 to 5 percent.
Freda stressed, though, that his continued leadership is up to the board.
“As far as I know today the board is with me and we are committed to continue working together,” Freda said. “So we are not entering today a transition period. However, we are definitely managing succession in the right way. And so out of this succession is a different methodology than just CEO succession. I personally don’t believe in CEO succession, at least for our company….[W]e are not the kind of company…in which there will be a transition of the CEO. There will be a new CEO, a new team and a new direction. Now this is a long-term strategy where we have a continuity as you said, we have changed the direction of the company and there is so much still to do in this area, which is fascinating. So we are looking for a succession that includes the team.”
According to its latest annual report, Freda’s total pay package for the fiscal year 2022 was $25.48 million, compared with $65.9 million in 2021. Some of this will be made up of stock options, the full value of which might never be realized due to fluctuations in stock prices and vesting schedules.
While his base salary increased from $1.6 million to $2.1 million, the decrease in the total package was mainly due to 50,429,620 stock awards he received in 2021.
