AutoNation intends to begin a search in late 2021 or early 2022 to name a successor for Jackson, who again is CEO. He has spent more than 20 years at AutoNation's helm as CEO, chairman or executive chairman and plans to retire from both the retailer's board and management team by April 12, 2022.
The plan could enable the retailer to broaden the talent pool and allow someone to step into the chief executive role without lingering in Jackson's shadow. But delaying the search for more than a year is a surprise and will add to the management-change uncertainty surrounding the company, some auto retail and management experts said.
After all, AutoNation has been looking for a successor to Jackson, 71, since 2018.
"There has not been any stability for almost two years now, and then you're going to have a change again in, like, a year and a half," J.P. Morgan Securities analyst Rajat Gupta told Automotive News. "You need a form of stable management at the top or a well laid-out succession plan, which we have not seen yet or has been communicated, even though we sympathize with the unexpected developments regarding Cheryl's health."
Gupta said the shuffle of high-level executives at AutoNation is a concern among investors. He noted that AutoNation's stock price has underperformed peers since market lows during the early days of the coronavirus crisis, and he tied that in part to leadership uncertainty.
Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, said AutoNation's board should start the search for Jackson's replacement immediately. "There are good people available tomorrow, so I don't think they would need to delay on this," said Sonnenfeld, who also is president of the nonprofit Chief Executive Leadership Institute.
Waiting creates a period of strategic uncertainty for everyone in the organization, Sonnenfeld said. While AutoNation was "lucky to have Mike Jackson," who could step back into the role, he said, other executives at the company "don't know what their career track is going to be."
"They don't know what strategic commitments Mike can make in the role that he's in," Sonnenfeld said.
Marc Cannon, AutoNation's chief customer experience officer, said launching a CEO search in the middle of a pandemic "makes no sense."
"You have Mike who is the proven CEO," Cannon said. "And you have an unprecedented situation going on."
When it happens, the search will include both internal and external candidates, Cannon said.
Brad Marion, global sector leader for automotive for organizational consulting firm Korn Ferry, said waiting a while to start the search gives AutoNation's board some advantages in identifying potential candidates.
"No. 1, it gives the board the time to do the CEO succession process the right way," Marion told Automotive News. "No. 2, it allows the COVID situation to evolve further, and hopefully it is well behind us before that time."
David Whiston, an analyst with Morningstar, said in a note to investors last week that AutoNation is in "strong hands" with Jackson for the next nearly two years.
"Jackson is, in our view, one of the best dealer CEOs in the business and ran the firm for about 20 years, so we can't think of anyone better to replace Miller," Whiston wrote.
But Whiston also said in the note that he wants to see AutoNation's board get "Jackson's replacement search right the first time in 2022."