CHICAGO—Laurence Geller’s departure from Strategic Hotels & Resorts was the result of a “mutual agreement” between the now-former president and CEO, and the company’s board of directors, according to Raymond L. “Rip” Gellein Jr., who will succeed him.
Gellein, who will retain his position of chairman of the board, reiterated numerous times during a Friday call with analysts that Geller did not leave because of a financial, strategic or some other dispute.
“This was a mutual decision for Laurence and the board,” he said, adding Geller’s employment contract was set to expire at the end of this year.
“As we’ve said over and over, it was a unanimous agreement with the board and Laurence, and that’s what created the deal,” he emphasized later.
|
|
Laurence Geller |
Raymond "Rip" Gellein Jr. Chairman and CEO |
Gellein, who will serve as full-time CEO, said his appointment should not come as a surprise. Strategic put in place a succession plan two years ago that pegged him to fill Geller’s role upon his inevitable departure.
“This was really the natural transition,” he said.
When asked about the timing of the announcement, which occurred at 4 p.m. EDT on Friday, Gellein said the board was simply trying to disclose pertinent information to key stakeholders as soon as the decision was made.
“When those discussions were completed, we thought it was not only a good thing but the right thing to do,” he said.
Geller, who founded Strategic in 1997, agreed to step down Friday morning.
The terms of his departure were not disclosed despite prying from analysts. They will be released Thursday, the same day as the company’s quarterly earnings call. CFO and executive VP Diane Morefield said the delay, which several analysts criticized, is in accordance with U.S. Securities and Exchange Commission guidelines.
“We wanted to keep on the same earnings announcements schedule we were already on because our external auditors review is tied to those dates,” she said.
When asked why Geller was absent from the call, Gellein responded, “Laurence is no longer an officer or a director of the company, so we didn’t think it was appropriate for him to be on the phone.”
Strategic alternatives
In a news release regarding the announcement, Strategic said, “Following the recession, the company has been intently focused on completing its turnaround strategy, otherwise known as ‘Strategic 2.0.’ Having achieved its core objectives, today the company is recognized as being among the highest performers in the industry.”
However, when asked during the call what new strategic endeavors Gellein would oversee, he said it would be more of the same.
“That strategy continues. … We’re going to keep on keeping on,” he said.
That strategy focused on deleveraging Strategic’s balance sheet post-recession while curating a world-class collection of luxury and upper-upscale hotels. “We’ve been very successful with that strategy,” Gellein said.
When asked how his leadership would be different from Geller’s, Gellein said, “I’ll let you guys judge the difference.”
“My style is to enhance the teams that work for the organization, to look for opportunities. I’ve been a deal guy for most of my life. So we’ll look for new, good, future opportunities.”
He did not rule out a potential sale of the company as one of those future opportunities.
“The CEO has to look at all alternatives,” he said, adding Strategic was trading below value. The company’s stock price closed Friday at $5.57 per share and is up 3.72% year to date.
Gellein formerly served as head of a vacation ownership group, of which he oversaw the sale to Starwood Hotels & Resorts Worldwide. He later served as director, chairman and CEO of Starwood Vacation Ownership.
When asked by an analyst if Strategic has fielded any offers from interested buyers, Gellein declined comment.
“The successful public companies don’t comment on rumors of those kinds, so we’re not going to comment either.”