Six months into her tenure, Avon is finally giving Sheri McCoy, the beauty company’s chief executive, a free hand. Former CEO Andrea Jung ultimately bears responsibility for messing up Avon’s door-to-door business model. Yet the company resisted wiping the slate clean, keeping her involved as executive chairman. The board is at last moving her out of the limelight and into an advisory role.
McCoy should now find it easier to overturn Jung’s plans if that’s what she thinks is needed. And with lead independent director Fred Hassan taking over as non-executive chairman, she will have a former CEO of Schering-Plough watching her back.
There’s plenty of work to do to fix the damage from Jung’s ill-fated restructurings. Avon Ladies have defected in Brazil and abandoned their posts in North America. If McCoy wants revenue to stabilise, she’ll need to get the company’s rank and file back in line. That’s easier if she doesn’t have the former commander-in-chief breathing down her neck.
Letting go of the reins fully may be a blow to Jung’s ego, but her pocketbook won’t necessarily suffer. She’ll retain her $1 million base salary as senior adviser to the board, and she could walk away with more than $3 million if she decides to leave the firm.
Avon shareholders applauded the move. The company’s stock was up more than 6 percent in late morning trade on Friday. Still, it fetched a quarter more when fragrance-maker Coty proposed a tie-up earlier this year. While ditching Jung unshackles McCoy, the company’s makeover is only just beginning.