In an Aug. 10 internal memo obtained by Advertising Age, Coke CEO Neville Isdell told worldwide employees that Sept. 1 would be Mr. Heyer's final day at the Atlanta-based marketer.
"Effective September 1, Steve's direct reports will report to me," the memo said. Through the end of August, Mr. Heyer will "continue to work on a number of projects that he and I have agreed he should finalize before leaving," the memo added. Mr. Heyer, brought in as a change agent, was passed over for the CEO job in part because of his blunt management style.
According to executives familiar with the situation, he's nearing an employment deal to run Starwood, the White Plains, N.Y. operator of more than 700 hotels in 80 countries under brand names including Sheraton, Westin, St. Regis and W. Mr. Heyer was on vacation and did not respond to messages. Those close to him cautioned that his plans have not been finalized.
As an executive with strong international and operational skills, Mr. Heyer is a good match for Starwood, which trails only Marriott International in overall market share and is the hottest stock in the lodging market. Starwood reported a 12% jump in second-quarter revenue to $1.1 billion, with revenue per room at all hotels up 17.1% worldwide and 16% in North America. Revenue per available room, a widely used measure of room rates and occupancy, jumped 17% globally, turbocharged by a 49% gain in Asia Pacific.
After flatly denying the rumored move in recent weeks, a Starwood spokeswoman changed tack last week and said she would not comment on the search. The position has been open since Oct. 30, 2003, when current CEO Barry S. Sternlicht announced he was stepping down. Mr. Sternlicht is co-chair of the search committee formed to pick his successor, and will officially resign-and take over the newly created position of executive chairman of Starwood-when the replacement is found.
In May, the hotelier in press reports confirmed it had contacted Mr. Heyer, who rebuffed the job since he was vying for the CEO post at Coke as the sole internal candidate. Shortly after that, the Coke announced it had tapped retired Coke bottling executive Mr. Isdell for the job. A week after Mr. Isdell took the helm, Coke announced Mr. Heyer's pending departure, opening up his dance card.
As recently as June, a Starwood spokeswoman told Advertising Age that neither Mr. Sternlicht nor the Starwood board of directors had met with Mr. Heyer, and that the rumors of his candidacy were "off-base."
Mr. Heyer is expected to receive a severance package of as much as $24 million, depending on the Coke's 2004 results and shares on his departure date.
Starwood is expanding globally, which would benefit from Mr. Heyer's recent experience. But since Mr. Sternlicht will remain as executive chairman, it remains to be seen whether Mr. Heyer is in for a repeat of the political machinations of his Coke experience.
At Coca-Cola, Mr. Heyer won kudos from bottlers and Wall Street analysts for helping it differentiate its vast product lines and for improving operations, a well-known skill gap in Starwood's ranks.
Several observers believe Mr. Heyer ultimately would be best suited to lead a private-equity organization where he can use his marketing vision and operational skills to turn around troubled companies, yet another executive saw Starwood as a perfect fit. "If there was any brand that fit Steve's personality, it would be that brand," said one former associate.