Geller on his exit: Strategic on firm ground
Nov 03, 2012 (Menafn - Chicago Tribune - McClatchy-Tribune Information Services via COMTEX) --Laurence Geller's surprise resignation as president, CEO and director of Strategic Hotels & Resorts Inc. left Wall Street analysts searching for explanations late Friday afternoon.
Geller and the company's board asserted this was a good time to part ways because the Chicago-based firm has stabilized after a recessionary swoon and Geller, at 64, wants to pursue other interests.
The Britain-born founder of the luxury-hotel investment trust said he wants to devote energy to fostering hospitality education, boosting Chicago's tourism profile and writing a third novel.
"Right now I'm trying to decide if I lost somebody or if I just had a grandchild," he said, explaining his mixed emotions.
But the financial community clearly was perplexed during a conference call at 4 p.m., an hour after the announcement, which came right after the stock market close.
Analysts grilled board Chairman Raymond L. "Rip" Gellein Jr., who is taking on the additional role of CEO, for more than 30 minutes about whether there were underlying reasons for the resignation and the timing of the announcement.
"We know Laurence's passion," said Bill Crow, an analyst with Raymond James Financial. "Was there a financial disagreement on a new employment agreement, or strategic differences on asset sales, or anything like that?" Geller's contract was up for renewal at year-end.
Others questioned the timing so late in the day Friday, with one asking "if any other shoes will fall."
"One of the things we want to emphasize is that our balance sheet is strong, our hotels are terrific, they are run by able brands," said Gellein, a member of the company's board since August 2009 and its chairman since August 2010. "There is not another shoe to drop. The management team is in place."
Geller, a charismatic dealmaker, will serve as an adviser until year-end. The terms of his exit, including details about severance and any non-compete provisions, were unavailable Friday, with Gellein and Diane Morefield, the chief financial officer, saying his separation agreement will be filed with regulators by Thursday.
"Is there anything in the separation agreement to prevent him from finding capital partners and bidding for the company?" Crow asked.
Morefield said the company could not discuss terms of the agreement until it is filed.
Enrique Torres, an analyst with Green Street Advisors, said the transition may signal a sale of the company is a more likely possibility.
Torres noted Gellein has a track record of selling a public hotel company earlier in his career, having sold Vistana to Starwood, "whereas departing CEO Geller has been perceived to be an unwilling seller." In a recent Tribune profile, however, Geller had mentioned that a sale was an option at some point.
Gellein told analysts the company will continue with the same strategies that were in place under Geller's leadership.
"We will continue to de-lever our balance sheet, seek opportunities to grow our portfolio, like with (the recent purchase) of the Essex House, and we'll have an unwavering focus on asset management and extracting value from properties," he said.
Previously, Gellein was president of the global development group for Starwood Hotels and Resorts Worldwide. He told analysts he was selected as Geller's eventual successor two years ago, but that his employment contract has not been worked out yet.
Geller, who launched the company in 1997, was awarded a one-time bonus in April for bringing it back from a precipitous plunge during the recession. The bonus is worth about 15 million, with half in deferred stock he will receive in 2014.
Having come through a difficult divorce and now involved with Paris-based hotelier Grace Leo, Geller said it was time to make a life decision.
"I could drift along and find myself at age 70, while having had fun, still not having done all I needed to have done. I have a third book in me, and I already have the title: 'Room Service.' "
His second novel, "The Last Resort," a thriller whose protagonist is a global hotelier, is expected to be published next week.
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