Starwood Hotels CEO quits after rift with board
Starwood Hotels & Resorts Worldwide Inc. said Monday that Chief Executive Steven Heyer had resigned after he and the company’s board clashed over his management style, surprising analysts who say the company’s overall strategy is sound.
The change at the top suggests that the company could be sold, given the favorable buyout environment and the sector’s strengths, analysts said. Starwood operates hotels under the Sheraton, Westin and W Hotel brands.
Chairman Bruce W. Duncan was named interim CEO while the board searches for a successor.
Heyer took the top post at Starwood in October 2004 after being passed over for the CEO job at Coca-Cola Co., which named Neville Isdell instead.
Heyer, 54, also will step down from Starwood’s board.
Heyer leaves Starwood without severance pay, unusual for the head of such a large company. He will be paid $250,000, or one-fourth of his annual 2007 salary, and a $2-million bonus for his 2006 work, but he will forfeit all of his stock options, unvested restricted stock units and unvested deferred 2007 bonus and salary, according to a company filing with regulators.
Board member Stephen Quazzo, who is leading the search for a replacement, said the company had no plans to change its strategy of further developing its fee-based franchise business and selling off some real estate assets.
The company said differences in opinion regarding Heyer’s management style led the board “to lose confidence in his leadership.”
One issue analysts raised was that Heyer lived in Atlanta for his entire term as CEO, commuting to the company’s headquarters in White Plains, N.Y.
“I will be based in White Plains so I can be easily accessible to the Starwood leadership team and be closely involved in daily operations,” Duncan said Monday.
Duncan, 55, has been Starwood’s chairman since 2005 and a board member for more than a decade.
Starwood, whose other brand names include St. Regis, Aloft and Element, has more than 400 hotels, or about 100,000 rooms, planned or already being built.
The management shake-up could lead to a sale of the company, Citigroup analyst Joshua Attie said.
“Change in leadership may serve as a catalyst for Starwood to explore the possibility of an outright sale,” Attie wrote in a Monday morning note to investors. “We have no specific knowledge of a transaction, but the environment seems right in which to sell the company.”
Starwood shares rose $2.97 to $67.82 on Monday.
