The exit of Keith Block as Salesforce's co-CEO leaves some big shoes to fill at the software giant.
Investors were caught off guard by the news of Block’s departure on Tuesday. Block had served as co-CEO with Marc Benioff only since August 2018, and the two had split responsibilities with Block overseeing strategy, execution and operations and Benioff heading up the firm’s culture. Salesforce (CRM) - Get Report shares were down 2.2% on Wednesday to $177.30.
Benioff, who co-founded Salesforce 21 years ago, had also been spending more time on extracurricular initiatives, such as buying Time Magazine with wife Lynne Benioff and campaigning for political and social causes, before being thrust back into the role of sole CEO.
“Salesforce beat earnings expectations and has shown strong growth consistently over the years, so it’s highly unlikely Block leaving is related to performance. By all accounts, he was a key factor in driving that performance,” said Daniel Elman, analyst at Nucleus Research.
By and large, Wall Street analysts said that despite the surprising timing of Block’s departure, Salesforce’s fundamentals will remain unchanged amidst the leadership shuffle. Salesforce shares have an average target price of $210 among 43 analysts polled by FactSet.
On a call with shareholders Tuesday, Benioff rallied some of Salesforce’s top brass around him, including co-founder and current head of technology Parker Harris, calling the leadership group “the finest management team in the software industry and maybe any industry” and called out their qualifications by name.
“Given [president and COO] Bret Taylor’s rise in the company over the last few years, it seems he may be a likely candidate for CEO in the future,” noted Elman.
Taylor came to Salesforce when it bought Quip, a productivity startup Taylor co-founded and led, in 2016. Taylor has quickly risen through the ranks at Salesforce, having been promoted to president and chief product officer and then president and COO in December 2019.
“Many of you know [Taylor’s] tremendous lineage... including Facebook and Google, and his own private companies,” Benioff said on the conference call, also citing the “public company” expertise of Tableau CEO Adam Selipsky and newly appointed CEO of Salesforce International Gavin Patterson.
Benioff may not be around as CEO forever, but his message to investors seemed to be: Don’t worry, there’s a lot more talent to draw from here.
Salesforce shares are up 6% so far this year.