AutoNation begins search for new CEO; Jackson to transition to executive chairman

September 19, 2018 01:00 AM

Mike Jackson: “The company is ready for its next chapter with a strong foundation, a coast-to-coast brand, a comprehensive brand extension strategy and a transformational digital consumer car-buying experience."

AutoNation Inc. is launching a search for a new CEO as longtime leader Mike Jackson prepares to move into a new role as executive chairman of the country’s largest new-vehicle dealership group.

Jackson, who will turn 70 in February, will continue in his current position as chairman, CEO and president during the succession process, the company said Wednesday. Jackson, who has been AutoNation’s chief executive since 1999, is expected to transition to the executive chairman position next year. AutoNation has extended Jackson’s contract through 2021 in that role.

The announcement means Jackson will shed the CEO title a lot earlier than he once indicated. He previously had said he wanted to run AutoNation for as long as friend and competitor Roger Penske ran rival Penske Automotive Group. Penske was 76 at the time Jackson made the comments.

The move comes 10 months after Jackson wrapped up a five-year overhaul of AutoNation’s strategy to position the retailer for the long-term future. Those steps included putting the AutoNation name on most of the company’s stores; setting up AutoNation Express online storefronts; launching standalone used-car outlets; branding parts, accessories and finance-and-insurance products with the corporate moniker; and servicing Waymo self-driving vehicles.

Jackson referenced those actions in Wednesday’s announcement.

“The company is ready for its next chapter with a strong foundation, a coast-to-coast brand, a comprehensive brand extension strategy and a transformational digital consumer car-buying experience,” Jackson said. “While the board commences their succession process, we will remain focused on delivering a peerless customer experience and executing our brand extension and digital strategies.”

AutoNation’s stock hit a new 52-week low of $42.87 in mid-day trading Tuesday before closing at $43.09 per share. Its 52-week high is $62.02. The shares rose 1.9 percent to close at $43.91 on Wednesday.

Executive search

AutoNation’s board of directors has retained executive search firm Spencer Stuart to help find a new CEO. The company said it will consider both internal and external candidates.

Jackson’s current top lieutenant is COO Lance Iserman, a 17-year AutoNation veteran who has been in that post since June 2017. Iserman is the retailer’s third COO since 2015. Jackson’s longtime No. 2, Michael Maroone, stepped down from that position and retired in early 2015. Maroone was replaced by long-serving AutoNation executive Bill Berman, who then left the company in May 2017.

CNBC screen grab

Jackson has made regular appearances on business network CNBC for several years. He served as a "guest host" during Wednesday morning's broadcast.

At the time of Iserman’s promotion last year, Jackson noted that the move didn’t mean his new COO would have the inside track to the CEO job. Jackson told Automotive News then that the company would consider AutoNation’s entire leadership team to replace him when he retired, as well as candidates from the outside.

In addition to Iserman, he touted other executives including Scott Arnold, executive vice president of customer care and brand extensions; CFO Cheryl Miller; and Chief Marketing Officer Marc Cannon.

The Penske model

Jackson also said back then that his retirement plans were far off. He previously signed a contract in January 2015 that extended his employment with AutoNation until at least 2019.

In 2013, shortly before Jackson turned 65, he told Automotive News that he planned to stay with the company indefinitely, asserting that he wanted to emulate Roger Penske’s leadership timeline. “Let’s say Roger retires when he’s 85, in which case I’ll be [near] 75. You can then say: ‘Mike’s going to retire in 10 years.’ Whatever Roger’s in for, I’m in for.” Penske is now 81 and continues as chairman and CEO of the rival auto retailer.

In a separate statement, Jackson declined to say whether he thought he would be up for another contract extension beyond the just-announced 2021 date.

“I am focused on the near term, which is the continued success of AutoNation’s brand extension strategy, continued digital [transformation] and preparing the company for the transition to the new CEO,” Jackson said.

AutoNation’s lead independent director, Michael Larson, in the statement praised Jackson’s leadership at the retailer for the past 20 years.

“AutoNation’s board will initiate its search for the next CEO who can take the baton from Mike and lead AutoNation into its next phase of continued growth and success,” said Larson, who is chief investment officer for Microsoft co-founder Bill Gates. Gates, through his various investment vehicles, became AutoNation’s largest shareholder in early 2016.

Lured by Huizenga

Jackson joined the retailer in 1999, wooed from the top job at Mercedes-Benz USA by the late AutoNation founder Wayne Huizenga. He was met with immediate challenges -- Jackson has described it as “chaos” -- and moved quickly to close most of the retailer’s 29 used-car megastores and convert the rest to new-car dealerships. He also killed plans for a national brand rollout, though he kept the idea close and bided his time until the 2013 rollout of the AutoNation brand on all of the company’s dealerships save for luxury-brand stores.

Jackson now touts mission accomplished on AutoNation’s turnaround. In July, he was inducted into the Automotive Hall of Fame in Dearborn, Mich.

“I’m always looking for ways to maintain our industry-leading status, from diversifying our portfolio mix to creating our own branded products, to establishing a culture where 26,000 strong are focused on driving out cancer,” Jackson said. “Having implemented each of these successfully, and understanding the changing retail automotive landscape, it was clear that time was now for the transition.”