Clorox Picks A Top Coke Officer As New Leader
Clorox Picks A Top Coke Officer As New Leader
Clorox Co., a midsize producer of well-known household products, is reaching outside its ranks for the first time to tap a new leader with big-company experience: Donald R. Knauss, head of Coca-Cola Co.'s largest market.
Clorox, whose brands include Glad trash bags, Brita water filters and Kingsford charcoal as well as its namesake bleach, last night confirmed an online Wall Street Journal article about Mr. Knauss's appointment as chairman and chief executive. Mr. Knauss, 55 years old, will take the helm of the company in early October.
Taking Mr. Knauss's place as Coke's president for North America will be J. Alexander M. "Sandy" Douglas Jr., 45. Mr. Douglas, who joined the company in 1988, is currently chief customer officer. Mr. Douglas ran much of the North American business from 2000 to 2003.
Mr. Knauss will be the first outsider to run Clorox, which is based in Oakland, Calif., and was founded in 1913. His selection comes as Clorox faces rising costs of commodities including oil and chemicals, and intensified competition from much-bigger consumer-products rivals such as Unilever PLC and Procter & Gamble Co.
The selection of Mr. Knauss shows the value Clorox places on big-brand expertise and strong bonds with major retailers. Key Clorox directors also are counting on Mr. Knauss's international experience to help Clorox expand overseas, where it badly lags behind competitors.
Jerry Johnston, Clorox's previous chairman and CEO, retired in May at age 58, two months after a heart attack. Robert Matschullat, an outside director, held the top two posts on an interim basis. Mr. Knauss "has a track record of transforming businesses and accelerating growth," Mr. Matschullat said in an interview.
Mr. Knauss has long been in the mix of senior executives seen as possible successors to Coke's CEO, Neville Isdell. But Coke has said there is no retirement timetable for Mr. Isdell, who is 63. Also, Muhtar Kent, named to run Coke's international business this year, has emerged as an inside front-runner, according to people familiar with the matter. The Coke board also plans to consider external candidates. Mr. Isdell has brought in several key executives in recent years, which should cushion the loss of Mr. Knauss.
In an interview, Mr. Knauss said he was attracted by Clorox's market-leading brands and an ambition to lead a public company. "I wanted to seize the day," he explained. Age 55 "is the perfect time for me to do that." Clorox didn't disclose details of Mr. Knauss's compensation package.
Mr. Knauss brings close ties to retailers, a big asset as retailers trim inventories to stock only top-selling brands. He offered several retail chief executives as personal references -- an unusual move, according to Mr. Wood. Mr. Knauss said he intends to enlist retailers' help in developing innovative Clorox products.
Despite its big brands, Clorox is a niche player in the consolidating household-products sector. Its $4.6 billion in annual sales is dwarfed by P&G's $68.2 billion and Unilever's $49.4 billion. Net income fell 59% to $444 million in the fiscal year ended June 30, reflecting rising raw-material costs and a one-time gain in the prior year.
Clorox faces growing competition in several of its market-leading categories, long ignored by rivals. Clorox's cleaning products, which include the Formula 409, Pine Sol and Tilex lines, face pressure from P&G's expansion of Mr. Clean. Clorox's core bleach products must compete with private-label brands as well as detergents that include bleach, or a substitute.
Mr. Knauss said international markets will "be a key area of focus" during his Clorox tenure. "There's a tremendous amount of growth potential there," he said.
Clorox's brand portfolio makes it a seemingly attractive takeover candidate. But Mr. Knauss said the company could "ward that off" by growing and building partnerships.
A former Marine, Mr. Knauss joined Coke's Minute Maid unit in 1994. He spent nearly two years managing Coke businesses in 10 African countries and was named president of the North American division in 2004.
Since then, the unit has posted five consecutive quarters of sales-volume growth after declines in 2004, when Coke lost market share to PepsiCo Inc. The company has rolled out modest hits such as Coke Zero, a diet cola aimed at young men, but sales of carbonated soft drinks are suffering amid concerns about obesity. North American soda sales were flat and noncarbonated-drink volume grew 7% in the second quarter.
