Advance Auto’s leadership is in transition
In January, George Sherman, the president of Roanoke-based Advance Auto Parts, becomes new interim CEO, taking over the reins from retiring top executive Darren Jackson.
Jackson also is stepping down from the board after more than 11 years with the company, eight as CEO.
The change is part of a leadership shift announced in mid-November that also made one of the company’s major shareholders (and critics) a member of the board.
Sherman joined Advance as president in April 2013. He will be considered along with candidates from outside the company to fill the post permanently, says John (“Jack”) Brouillard, who became executive chairman of the board in November.
Jackson stepped down after a tenure that saw Advance double in size, increasing its market value more than $10 billion and raising its share price from $33 to $195. Nonetheless, activist investor Starboard Value LP says the company was not performing as well as its peers.
Starboard bought a 3.7 percent stake in Advance in September. Jeffrey Smith, Starboard’s CEO and chief investment officer, sent a letter to Jackson on Sept. 30 stating his belief that the “current market price of Advance does not fully reflect the value of its businesses and that opportunities exist within the control of management and the board to create substantial value for all shareholders.”
As a result of an agreement between Advance and Starboard, Smith now sits on the board, chairing its nominating and corporate governance committee and serving as a member of the compensation and finance committees. In addition, Starboard will be able to name two independent directors to the board.
Scot Ciccarelli, an analyst for RBC Capital Markets LLC, wrote that the board’s “recognition that a change was necessary in light of Advance’s underperformance represents a silver lining.” The leadership shakeup was announced on the same day that the company released third-quarter earnings results, which failed to meet market expectations. The company says profits were impacted by its continuing efforts to integrate the operations of General
Parts International. Advance acquired Raleigh, N.C.-based GPI in January 2014.
Ciccarelli, however, believes the GPI deal eventually will improve Advance’s core business. Also helping will be “potential revenue synergies as Advance capitalizes on GPI’s commercial relationships, know-how and distribution.”
Advance has about 75,000 employees and operates more than 5,200 stores, more than 100 branches of Worldpac (a wholly owned subsidiary) and serves about 1,300 independently owned Carquest stores in the United States, Puerto Rico, the U.S. Virgin Islands and Canada.