Starwood Appoints New CEO For 2nd Time This Year

Filed Under: Starwood Preferred Guest

Wow, things sure are getting interesting at Starwood.

In February of this year Starwood’s former CEO, Frits van Paasschen, resigned abruptly. This announcement caught a lot of people off guard. Starwood had been underperforming when it comes to limited service hotels, something which investors weren’t happy about. Adam Aron was appointed as the new CEO, with the goal of pointing Starwood in a new direction.

Aloft, one of Starwood’s growing limited service brands

While the sudden change in leadership was surprising, eventually it started to make sense even from the “outside.” Starwood was absolutely determined to announce a merger before the end of the year. There was all kinds of speculation of takeovers, from Chinese investors to a possible merger with Hyatt.

In mid-November it was finally announced that Marriott would be taking over Starwood in a $12.2 billion deal which is expected to close in mid-2016 [update: you can read all the details of the new Marriott-SPG program here]. In retrospect the change of leadership made sense — clearly Starwood knew from the beginning of the year that they wanted a merger, and Adam Aron was intended to be a transitionary CEO.


However, oddly Adam Aron has just resigned as CEO of Starwood, as he will become president of AMC Entertainment. On the surface him resigning makes more sense than the previous resignation, given that he has another gig lined up which will presumably be more long term. With Starwood he’d likely be out of a job by the middle of next year.

Still, it seems odd for someone who seems to be a transitionary CEO to leave in the middle of a merger, when presumably his role would be eliminated in the coming year anyway. I figured he’d have some huge performance bonus for a successful merger, but I guess the offer from AMC is more lucrative for him. Or maybe there’s more to the story (there usually is).

Starwood’s new CEO as of December 31, 2015, will be Thomas B. Mangas, who is currently Starwood’s Executive Vice President and Chief Financial Officer.


Via Starwood’s press release:

Bruce W. Duncan, Chairman of the Board, said, “On behalf of Starwood’s Board of Directors, I would like to thank Adam for stepping in to lead our company during a pivotal time in Starwood’s history. He accomplished much during his tenure as CEO, and contributed in countless ways as a member of our Board for nearly a decade. He leaves the company in excellent hands with Tom, a valued leader on our team who was instrumental in our review of our strategic alternatives and will continue to oversee the completion of our combination with Marriott.”

Aron said, “It has been a privilege to lead an extraordinary team of people around the world who, through their creativity and innovation, have changed the hospitality industry and the hotel experience in meaningful ways. I am proud of what we have accomplished together with reinvigorated existing brands, the launch of new brands, accelerated growth and our game-changing merger with Marriott to soon become the biggest and best hotel company in the world.”

Mangas has been Executive Vice President and Chief Financial Officer since September 2014, responsible for the global accounting, tax, treasury, strategic planning, corporate development, risk management, investor relations and supply chain functions. Prior to joining Starwood, Mr. Mangas served as Executive Vice President and Chief Executive Officer of Armstrong Floor Products, a division of Armstrong World Industries, Inc. (NYSE: AWI). From 2010 to 2013, he was Senior Vice President and Chief Financial Officer of Armstrong World Industries, Inc., where he was responsible for finance, investor relations, information technology and global business services. Previously, Mr. Mangas spent 20 years at The Procter & Gamble Company (NYSE: PG) in increasingly senior finance and accounting positions.

Am I the only one that finds all of this a bit strange?

  • Once Starwood was set on a takeover they hired a new transitionary CEO who would be focused on that (that part makes sense)
  • Less than a year after being appointed, and during the early stages of the merger, he resigns and someone else is appointed CEO
  • While I doubt Aron was pushed out based on the fact he already has a job lined up elsewhere, aren’t there generally performance bonuses tied to the closing of a major takeover like this?

Very interesting times at Starwood for sure. I’m curious to see what practical implications this has, or if the new CEO is basically just a “puppet” for the merger proceedings.


What do you make of this rather curious mid-merger resignation?

  1. Definitely surprising as transitional CEO’s usually have a compensation package explicitly structured to make it worth their while to stay on for the length of the role, given that it’s not ideal in general to be a temporary CEO.
    It’s also possible he was hoping for a different outcome (i.e. different buyer than Marriott) and a combination of an unpleasant merger for him and lucrative package from AMC made it worth any losses from leaving Starwood.

  2. Bonus or not, if he was transitional, he was clearly looking for the next thing. And when it happened, he jumped.

  3. He might not necessarily be booted after the merger and here is why: After the merger they will have the biggest hotel chain in the world. Seeing how different the loyalty programs are starwood might remain a different entity portfolio of its own while keeping their point system the same. And if Marrirot loyalist want to transfer to starwood and vice versa we could see a 3:1 marriot -> starwood or, a 1:3 starwood->marriot interchangeably whenever, which would make the programs even more flexible than they are and allow everyone to have what they want in their program. One can dream at least…although I think this is the best option to keep both customers happy and fairly attainable.

    The merger will probably be the longest one we have seen before it is smooth sailing again and Marriot needs someone high up on Starwood’s team to help the merger come together.

  4. He will be booted from the role of CEO. Or you guys think the new CEO once nboth companies are integrated will be the Starwood one? When a company is acquired by another one the message is very clear: WE acquired you!!!! Basically means: Shut up and do what I say. 🙂

  5. As I see it, Aron was a board member who took over the reigns of CEO because he happened to have some time to take this on. His main business interest at the time seemed to be the 76ers. Now that the merger has been decided, and he has an offer for a role at AMC which will be a career focus, there is no reason for him to stick around at Starwood. Is he still on the board? The CFO takes over to deal with the operational issues associated with the merger and it is for him that the performance bonus would matter. Just a guess, not based on any actual knowledge other than what we’ve all been following.

  6. The part of the merger including negotiations are done, so the old CFO is taking over when the more operational and financial parts of the merger are worked on. Makes sense.

  7. “Or maybe there’s more to the story….”
    How right you are. A seven year story of hollowing the brand and a major B of D cover-up.
    Aron’s departure is called “getting out while the going’s good” – and before the lawsuits begin!

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