Change of Guard as Mark Parker Steps down as CEO of Nike

After 13 years at the helm as CEO of Nike, 64-year-old Mark Parker is stepping down. What’s next?

Who is the CEO of NIKE?

The announcement made in October that Mark Parker will step down as Nike’s CEO after 13 years at the helm came as a significant shock to the business world. Not least because just two years ago, the company said Parker would remain Nike CEO “beyond 2020.” Furthermore, the 64-year-old has been a Nike employee since 1979, rising through the ranks and making vital contributions to the company’s product design.

Yet Parker and Nike had been hit by scandals of late. In the spring of 2018, allegations of gender discrimination and the existence of a so-called Nike Executives “boys club” led to multiple lawsuits and an executive overhaul. Then the company’s running club, Nike Oregon Project, was discontinued after longtime coach Alberto Salazar was banned from the sport for four years for doping violations. Parker has denied that these issues were the reason behind his resignation as CEO of Nike.

Founded in 1964 as Blue Ribbon Sports, Nike, Inc. is a US multinational corporation engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. It is the world’s largest supplier of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of $36 billion in 2018. The company markets its products under its own brand, as well as:

Nike Golf
Nike Pro
Air Jordan
Nike CR7, among others.

Other subsidiaries include;

Brand Jordan,
Hurley International
Converse

Apart from its brands and subsidiaries, Nike also sponsors many high-profile athletes, including footballer Cristiano Ronaldo and Tennis star, Serena Williams, as well as several sports teams around the world, with the highly recognized trademarks of “Just Do It” and the famous Swoosh logo.

Mark Parker’s Rise to Nike CEO

Born in Poughkeepsie, NY, in 1955, Mark Parker earned his BA in Political Science at Penn State University in 1977 where he also competed on the track and cross country teams. He joined Nike in 1979 as a footwear designer based in its R&D department and rose through the company ranks to hold the positions of Division Vice President, Corporate Vice President, General Manager, and Vice President of Global Footwear. He remained closely involved in shoe design even after becoming the CEO of Nike in 2006, as well as ensuring that Nike embarked on an environmentally conscious business strategy. Parker was voted Fortune’s Businessperson of the Year in 2015.

A self-professed “product geek,” Parker is credited with the invention of the world-famous Nike Air, a technology that uses an air bubble in shoe soles for cushioning and propulsion. The technology was created for running shoes, but has since been applied to many key Nike products and generated billions of dollars in sales. Crucially, Parker also pushed the company to invest heavily in research and development and build up a massive patent portfolio, with 867 patents secured in 2018 alone.

Parker will also be remembered for leading Nike’s efforts to integrate digital technologies into the company. The Consumer Direct Offense, which he announced two years ago, has helped Nike grow high-margin direct-to-consumer and e-commerce sales, as well as subscriptions on its mobile apps. In his time as Nike’s CEO, the company’s stock has grown nearly 800%. Annual revenue has grown from $15 billion in 2006 to more than $39 billion in the 2019 fiscal year.

“The future of sport will be decided by the company that obsesses on the needs of the evolving consumer,” said Parker in 2017. “Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever (…) Mark Parker has worked at Nike for 40 years, doing an exemplary job in many different positions,” Nike co-founder and Parker’s predecessor as CEO, Phil Knight, said in a statement upon news of his resignation. “His years as chief executive officer have been outstanding.”

Parker’s predecessor as CEO, Phil Knight, said in a statement upon news of his resignation. “His years as Nike’s Chief Executive Officer have been outstanding.” He further noted, “With Mark moving into a new role as Executive Chairman and John Donahoe coming as Chief Executive Officer, Nike will have an awesome team in place with complementary skill sets. They’ve already worked well together on the Board for the last five years. Forbes recently picked the two of them in the top 25 of America’s most innovative leaders.”

Inevitable Controversies During Parker’s Tenure as Nike CEO

Granted the size and immense public profile of Nike, controversy has never been far away for Parker. Over the past two years, the company has been accused of a far-left bias with regard to its advertising and business practices and alleged pay discrimination against female employees. Essentially, two former female employees sued the company and highlighted a toxic workplace culture where sexual harassment and gender prejudice were not uncommon. They further claimed Nike often recruited women at lower salaries than men and promoted female employees less frequently in comparison to their male counterparts. The women also claimed that reported incidents of sexual harassment were either ignored or handled inadequately.

However, the aforementioned Nike Oregon Project doping scandal in which Nike coach Alberto Salazar was targeted by the US Anti-Doping Agency for experimenting with performance-enhancing drugs on his athletes grabbed the biggest headlines amongst the scandals that marred Parker’s tenure as CEO of Nike.

In September 2019, emails emerged that revealed Mr. Parker had direct knowledge of tests being conducted with performance-enhancing drugs by the company’s premier long-distance running coach, Alberto Salazar.

Based on emails contained in a decision in a case between the United States Anti-Doping Agency and Mr. Salazar, Mr. Parker and other top Nike executives were briefed on several occasions between 2009 and 2011 about medical experiments involving testosterone, a banned substance. The tests, the agency reported, were an attempt to determine the effects of testosterone, how much of the substance could be used by athletes without it being detected, and whether an allowable amount of another substance, L-carnitine, could be used to benefit athletes.

Mr. Parker and Nike initially stood by Mr. Salazar and committed to funding his appeal of the punishment. A week later, however, Mr. Parker announced that Nike was shutting down the Oregon Project and cutting official ties with Mr. Salazar, though it said it would still finance his appeal.

Nevertheless, following his departure from his role as the CEO of Nike in January, Parker will remain involved with the company. Upon news of his resignation, Parker published a letter to Nike employees in which he stated: “To be clear, I’m not going anywhere. I’m not sick. There are no issues I’m not sharing. I strongly believe the best way for us to evolve and grow as a company is to bring in a phenomenal talent to join our team who have long been part of the Nike family.”

A spokesperson for Nike said Mr. Parker’s decision to step aside as Nike CEO now was “absolutely not” a result of the Oregon Project controversy or any other issue. Rather, he said, it was part of a plan with the board that has been in the works for months to name a successor.

Who is the Successor to Nike CEO, Mark Parker?

The has long been regarded as a type of family, with the majority of key Nike executives coming from within the company. Indeed, former brand president Trevor Edwards had long been considered Parker’s heir apparent until he resigned amid the company’s cultural realignment last spring. Instead, the role will go to a relative outsider, John Donahoe, a current board member and CEO of cloud computing company ServiceNow, Inc. The only other outsider Nike executive in the company’s history was William Perez, who was hired to replace Phil Knight in 2004.

Donahue is best known for his experience in the tech sector, something Nike has been investing in heavily. In 2018, it acquired the data analytics firm Zodiac and this year bought Celect, a company specializing in predictive analytics. From 2008 to 2015, Donahue served as CEO of eBay and also has valuable experience as CEO and managing director of the management consultancy Bain & Co.

Seen by many as an insular organization that can be tough for outsiders to navigate, Nike has looked outside the company before for executive leadership. The results were not reassuring.

In late 2004, William D. Perez, the former head of S.C. Johnson & Son, the maker of Windex and Ziploc bags, was named chief executive. Over the next 13 months, Mr. Perez battled Nike’s founder and chairman, Philip H. Knight, for control of the company before Mr. Perez abruptly resigned. Mr. Parker was named his replacement.

However, Nike’s board appears certain that Donahoe will help propel the company’s digital transformation, which has been a key element of its business strategy in recent years. “John is the right leader and a proven CEO who is no stranger to Nike. In his new role as Nike’s Executive Chairman, Mark will work closely with John to build on Nike’s success and seize the opportunities ahead,” a Nike spokeswoman told CNN Business upon the news of his appointment.

Analysts likewise view a smooth transition ahead. “Nike is a global icon, which provides protection from the numerous scandals that have occurred during Mark’s tenure,” said James Sisco, founder of risk advisory consultancy Enodo Global. “John’s experience at eBay and PayPal illustrates that Nike’s focus is on increasing profits by integrating digital marketing and other technologies into their operations. John was brought in to help Nike thrive in this new environment, which shows no signs of slowing.”

Nike’s Future under New CEO

The positive outlook towards the transition from Mark Parker to Mr. Donohoe as Nike CEO owes partly to his experience and knowledge of the company. He has been on Nike’s board since 2014, working closely with Mr. Parker and other executives as the company has expanded its business overseas and online.

Parker himself said as much in an interview with CNBC’s Wilfred Frost where here reiterated that Donahoe is “no stranger” at Nike and decidedly is “the best choice to come in.” He said Donahoe should “enable this next level of growth,” digitally, for the company. And he added Nike’s board has spent “many months working on succession planning. … This is not something that happens in a matter of weeks.”

The investments in technology Nike has been making come in response to major upheavals in how consumers are shopping amid sluggish foot traffic and a record amount of store closures. In 2017, Nike announced its intention to focus its wholesale business on a much smaller group of retailers and increase its direct-to-consumer sales, especially online through its e-commerce site and apps.

Coming on the back of a big change in executive leadership at one of Nike’s leading rivals, Under Armour, where founder and longtime CEO Kevin Plank will also step down in January, Mark Parker—whose legacy at Nike will not be easily forgotten—was bullish on the prospects for the company’s future. “(John Donahue’s) expertise in digital commerce, technology, global strategy, and leadership, combined with his strong relationship with the brand, make him ideally suited to accelerate our digital transformation,” he said in a statement.

Mark Parker’s legacy as Nike CEO can be best summed by the words of NPD Group’s Vice President, Matt Powell. He said, “the move to becoming more of a direct-to-consumer company and less of a wholesale company was really the hallmark of his work,” He added: “Nike during his tenure really did a lot of good work around sustainability, making products that were less wasteful.”