NEW YORK (AP) — Cosmetics and fragrance maker Coty said its interim CEO will continue in that role, and Elio Leoni Sceti, who was scheduled to become its CEO in about a week, won't be joining the company.
The company says it will pay Leoni Sceti $1.8 million in severance and buy back preferred stock he had bought.
Chairman Bart Becht has been Coty's interim CEO since September. Coty said Tuesday that it decided it needs continuity in its leadership as it implements a new business strategy.
The company said in a statement that Leoni Sceti had "reconsidered and decided not to join Coty" in connection with Becht staying on as interim CEO.
Coty said the severance payment, which is equal to one year's salary, was part of the employment agreement Leoni Sceti signed with Coty in April. The company will also pay about $55,000 to buy back the preferred stock.
Coty, based in New York, sells fragrances, cosmetics and skin and body care products under brand names including Calvin Klein, Marc Jacobs, OPI and Sally Hansen. Last August the company said it planned to cut $200 million in annual spending and would invest those savings in its most important brands to speed up their growth. Since then it bought Bourjois cosmetics from Chanel and announced distribution deals with Avon Products Inc. in Brazil and Li & Fung in China.
Last week Coty's stock jumped on reports it might buy several beauty brands from Procter & Gamble Co.
Stifel Nicolaus analyst Mark Astrachan said he thinks Coty's board decided it wasn't a good time to change the company's leadership. Astrachan said he thinks Leoni Sceti was offered a different job at Coty but declined.
"We believe the decision relates in part to company fundamentals remaining challenged and believe Mr. Becht staying on as CEO gives the company the chance to improve results as he did during his tenure at Reckitt Benckiser," he wrote. Becht was CEO of Reckitt Benckiser, a consumer products company, for about 12 years. Coty and Reckitt Benckiser are both controlled by Joh. A. Benckiser GmbH, a German holding company.
Coty's former CEO Michele Scannavini left the company for personal reasons in September.
Leoni Sceti, 49, is the former CEO of frozen foods maker Iglo Foods, the company behind the Birds Eye brand. Investment fund Nomad Holdings bought Iglo earlier this month and Leoni Sceti was replaced as its CEO.
Shares of City Inc. rose 30 cents to $31.74 in afternoon trading. Its shares have risen more than 87 percent over the past year.