Oakley Sets Aside CEO in Favor of Gatorade Veteran

In a surprise move, sunglass maker Oakley Inc. demoted its chief executive, replacing him with a former Gatorade executive with extensive marketing and advertising experience.

William D. Schmidt, 51, who departed Gatorade last month as vice president of Worldwide Sports Marketing, will take over as chief executive of Foothill Ranch-based Oakley on May 1.

He replaces Link Newcomb, who becomes chief operating officer, a new position. Newcomb, who became chief executive in 1997, remains on the board.

The company said it made the switch because Schmidt has the background to push Oakley to “the next level”--a company that eventually will generate global sales of $1 billion a year. Oakley’s 1998 sales were $231.9 million.

“Since 1984, Bill has helped grow Gatorade from a regional brand of less than $100 million in annual revenues to a position of global leadership with annual revenues of over $1.7 billion,” Oakley Chairman Jim Jannard said in a statement. “The board and I feel Oakley’s opportunities are similar to those of Gatorade more than a decade ago.”

The shift at the top could signal a significant change in strategy for Oakley, which has thus far taken a low-profile, grass-roots approach to advertising.

Schmidt said in an interview Wednesday that he would consider running Oakley television ads and hiring an outside advertising agency. Currently, Oakley’s advertising is handled in-house. Its only television commercial was a 30-second spot that ran six years ago.

“They’ve done great internally,” Schmidt said. “But it’s also great to get a perspective from the outside.”

Schmidt, who was introduced to Oakley by former basketball star and Oakley director Michael Jordan, said he will move to build the Oakley brand by focusing on marketing and advertising, including using more star athletes to promote the company’s sports-oriented eye-wear and other products.

Initially, Schmidt said, he intends to better define the company’s consumer and then focus its advertising on the various groups that buy Oakley products, including surfers, skiers and snowboarders.

Schmidt said he was impressed by Oakley from the day he entered the fortress-like headquarters 18 months ago, when Jordan nominated him to serve on the board.

“The culture is incredible and the enthusiasm is contagious,” he said.

Schmidt said he signed Jordan eight years ago as a spokesman for Gatorade, a division of the Chicago-based Quaker Oats Co. Jordan also endorses Oakley products. The company declined to comment on whether Jordan was instrumental in having Schmidt installed as chief executive.

Newcomb, who began working at Oakley in June 1994 as vice president of international sales, expressed no bitterness about the switch.

“I share the vision that this company has the potential to be $1 billion in sales,” he said. “And I welcome someone who has been there and done that.”

Schmidt, who won the bronze medal in the javelin at the 1972 Olympics in Munich, Germany, currently lives in Chicago but plans to relocate to Foothill Ranch over the next couple weeks. His salary was not disclosed.

The change at the top was a shock to Sunglass Hut International Inc., Oakley’s major client.

“We’re still evaluating it at the moment,” said John X. Watson, Sunglass Hut’s chief executive. “It was a surprise to us.”

Oakley also said first-quarter earnings rose 7.5% to $1.4 million, or 2 cents a share, from $1.3 million, or 2 cents a share a year ago on a higher number of shares outstanding. Sales increased 19% to $48.7 million from $41 million.

The company said the increases were fueled by an 11% increase sunglass sales and an 8% jump in the average price.

Sales of Oakley’s new athletic shoe, which have thus far been disappointing, were “minimal at $323,000,” said spokeswoman Renee Law.

The company plans to release another shoe style next month. Law described it as a low-top “performance shoe” that is not geared to any particular sport. It will sell for $90, which is $35 less than the first model.