Last night, Clorox (CLX) announced that CEO Donald Knauss would step down and be replaced by COO Benno Dorer. B. Riley’s Linda Bolton Weiser doesn’t expect any major changes other than a possible exit from Venezuela. She explains:
Clorox After the close on 9/18, CLX announced insider Benno Dorer, 50, will become CEO effective 11/20. This is not a big surprise as Don Knauss, 63, has been CEO for eight years. Dorer started his career with Procter & Gamble (PG), joined Clorox in 2005 and was promoted to COO in 2013. The Clorox share price has continued to go up over the years, but op. profit growth was higher and more consistent early in Knauss' tenure, with more inconsistency in recent years: FY07 +5%, FY08 +4%, FY09 +15%, FY10 +7%, FY11 -5%, FY12 -2%, FY13 +8%, FY14 -1%, FY15E +3%. During his tenure as CEO, Knauss acquired Burt's Bees (at a very high valuation) and several health care disinfecting businesses, and divested auto care (Armor All and STP). He can also be credited with building Clorox's Away-from-Home and B-to-B businesses, which have been growing in the double-digits. Early in his tenure, Knauss talked about building a bigger international business, but he didn't persist with that theme. While Knauss was CEO, Carl Icahn became involved as an activist shareholder, essentially inviting strategic and financial buyers to bid on Clorox—Clorox's board rejected Icahn's recommendation to sell the company. Icahn did not criticize how the company was being managed, but claimed the company was undervalued. We don't expect big strategic changes under Dorer, but wonder if he will make the move to exit Venezuela, where Clorox is now unprofitable, as a higher percentage of its business is impacted by price controls than for the personal care companies.
Shares of Clorox have gained 0.5% to $90.36 at 1:22 p.m., while Procter & Gamble has risen 0.6% to $84.70.
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