Lego CEO Step Downs in Historic Shift at Billionaire-Owned Firmby
The man who pulled Lego A/S out of an existential crisis to turn it into the world’s most profitable toymaker is stepping down as chief executive officer and will instead become the chairman of the company.
CEO Jorgen Vig Knudstorp, 48, will be replaced at the end of the year by 60-year-old chief operations officer, Bali Padda, Lego said on Tuesday.
The company, which has its headquarters in western Denmark and is controlled by the billionaire Kirk Kristiansen family, brought in Knudstorp in 2001 after he had worked for them as a McKinsey & Co. consultant. When he was made CEO in 2004, Lego was losing about $1 million a day as its traditional plastic building blocks couldn’t compete with a growing range of electronic toys.
From 2005 to 2015, Knudstorp helped revenue jump five-fold to 35.8 billion kroner ($5.2 billion). The CEO set up research teams to study how children played with the iconic building blocks, and supervised a shift in financial governance to make Lego less vulnerable to credit crunches.
Under Knudstorp, the company expanded its franchise deals with building block sets based on Hollywood movies, including Star Wars and Indiana Jones. He also introduced Lego Friends, a series aimed at girls. Last year, Lego reported net profit of 9.17 billion kroner, beating results at its U.S. rivals Mattel Inc. and Hasbro Inc. several fold.
Padda, who was born in India in 1956, has been with Lego since 2002. He will be the first non-Dane to run the 84 year-old company.
The board of Lego is proposing that Knudstorp become chairman in May, replacing Niels Jacobsen. Lego plans to set up a new entity, to be called the Lego Brand Group, which Knudstorp also will chair. The unit will focus on the long-term potential of the company’s brand.
“With our recent growth and globalization come new and exciting opportunities for the brand, and we establish the Lego Brand Group to look into these new opportunities,” Thomas Kirk Kristiansen, who is the fourth generation in the family to own Lego, said in a statement.