Tim Hortons CEO Don Schroeder abruptly left the company on May 25 last year, driven out by a dispute over succession planning.“The board has made the determination that the current timing under all circumstances is best-suited to transition CEO leadership,” Frank Iacobucci,the company’s lead director, said at the time. But nine months later, the chain still hasn’t named its new leader. Given that Tim’s seemed so keen to instigate a regime change, it’s reasonable to ask: What’s taking so long?
The company itself will only confirm that the CEO search is still underway. “We continue to make progress in the process,” David Morelli, director of public affairs for Tim Hortons, said in a brief e-mail. But observers suspect a combination of factors has stalled the coronation of the next doughnut king.
Schroeder’s unexpected departure has likely made Tim Hortons extremely cautious in its search for a successor. Further,the company has thrived under the leadership of interim CEO Paul House, a 25-year Tim’s veteran who served as CEO between 2006 and 2008 before becoming executive chairman.Revenue increased by 21% in2011. The chain hasn’t “missed a beat,” says Edward Jones analyst Brian Yarbrough. “Even if[House] is there another six or eight months, I would rather they take their time than make the mistake they made last time.”
If the board is comfortable with House’s leadership in the short term, it’s also likely seeking a permanent CEO with experience in the United States. By its own estimates, the Canadian market can sustain 4,000 Tim’s locations; as of last year, there were already 3,225. For long-term growth, the company must continue its international expansion,and its record in the American market is decidedly middling.While it doubled its U.S. presence over the past five years, now boasting more than 645 outlets,it was also forced to close 54stores there in 2010. Though it may take longer, Tim’s will ideally land a “bigger name person who’s had some experience and some success,” in that market, says Yarbrough.
If anything, the prolonged search for the next Tim Hortons CEO highlights the challenges all major companies now face in recruiting top executives, says Carl Lovas, chairman of global search firm Odgers Berndston.“You’re trying to attract from a very small pool of talent,” he says. “And these people are in organizations who put in place a lot of things to retain them. So it’s not extraordinary for a search like this to take six months—or longer.”