The surprise departure of Chris Peacock as CEO of Jones Lang LaSalle (JLL) could ultimately create a growth opportunity for the global real estate services firm, according to analysts.
“He hasn't done anything very dramatic,” says Morningstar analyst Arthur Oduma. Peacock, 58, will be remembered most for integrating LaSalle Partners with Jones Lang Wootton after the companies merged in 1999, Oduma says. Peacock served as COO of Jones Lang LaSalle (NYSE: JLL) from 1999 to 2002 before being named CEO.
His predecessor, Stuart Scott, 65, has come out of retirement to steer the company until a replacement is hired.
Analysts foresee growth for JLL if it capitalizes on the globalization of Corporate America and an accompanying wave of real estate outsourcing. With JLL already operating on five continents and doing business with major international corporations, Oduma says it's a natural evolution. “You can make the assumption that corporations will be opening (international) offices and they will be turning to JLL increasingly,” Oduma says of current clients such as Motorola, Procter & Gamble, Microsoft and General Motors.
Many analysts say Peacock's strength may have also been his weakness. “There is nothing really bad anyone can say about him, and that is a strength these days as a CEO,” says William Marks of San Francisco-based JMP Securities. “He never stood out in the industry as an extremely visible CEO. I don't think it will be difficult to find a good successor.”
Internal candidates as well as industry outsiders are being considered, and the successor will have experience with both international and public companies, says Scott, adding that “charm and gravitas” are also desirable. Scott's goal is to name a replacement within four to six months.
Analysts are concerned that if an outsider is chosen, it could lead to internal instability. “New leadership comes with risk, and in this case we fear that there may be several internal candidates vying for the job,” New York-based Morgan Stanley analyst Matthew Ostrower says in a report. “The choice of a new CEO could be accompanied by one or more other senior level departures.”
Scott has similar concerns. “Anyone who is in the ring or comes into the ring has an immediate session with me. So far, those who are interested have said they don't want to quit.” Scott declined to say how many executives have expressed interest in the CEO position.
The company announced Jan. 8 that Peacock was resigning immediately to spend more time with his family. He also retired from the board of directors. Peacock gave notice in September that he would sell 90,000 of his company shares (worth $1.6 million) to finance a divorce settlement. He has since reconciled with his wife, however, Scott says. The company plans to retain Peacock as a consultant.
The company's deep bench of managers, along with a statement that it is making no adjustment to its 2003 earnings guidance, has comforted shareholders and analysts.
The company's share price has remained steady at just under $21. The company's full-year earnings guidance is to meet or exceed $1 per share, according to its third-quarter earnings report.
Oduma says the company's stock is trading below its fair value — which he estimates at $30 per share — because of the tough corporate climate.