Disney CFO to Join Hotel Firm Starwood

Walt Disney Co. Chief Financial Officer Richard Nanula, one of Chairman Michael D. Eisner’s most trusted lieutenants, will quit to become president and chief executive of Phoenix-based Starwood Hotels & Resorts Worldwide Inc.

Nanula’s jump to Starwood, the world’s largest hotel and gaming company, comes as the firm, a real estate investment trust, is struggling to digest its acquisitions of the last year. They include the $10.2-billion purchase of ITT Corp., operator of Sheraton hotels and Caesars World casinos, and the $1.6-billion purchase of Westin Hotels & Resorts.

“We needed help honing the operations of the company and staffing its new business units,” said Starwood Chairman Barry Sternlicht. “Richard has lots of experience with that at Disney. He’s tried and tested in both good times and bad.”

Nanula, a 12-year Disney veteran, played a key role in restructuring the ailing Euro Disney project in 1994. He also was instrumental in integrating the operations of entertainment giant Capital Cities/ABC after its 1996 acquisition by Disney.

“That was his most significant piece of experience,” said Andrew Zarnett, an analyst with Ladenburg Thalmann in New York. “Integrating all of [Starwood’s] new properties requires an incredible amount of coordination and skill. [Cap Cities/ABC] was a $19-billion acquisition and it has gone very well.”

Starwood is what as known as a paired-share REIT. It is organized as two companies but trades as one on Wall Street. Nanula will become the highest-ranking officer of the management company, Starwood Hotels & Resorts Worldwide, which operates more than 650 hotels and 14 casinos in more than 70 countries.

Sternlicht will retain his title as chief executive of the hotel’s ownership entity, Starwood Hotels & Resorts, the real estate investment trust.

However, with most of Starwood’s major acquisitions behind it, Nanula’s job will carry increasing importance. Shareholders will expect managers to cut costs, close redundant hotels, streamline operations and implement new cross-marketing programs for the REIT’s various hotels.

“Our story has changed. We expect 85% to 90% of the company’s growth to be internal going forward,” Sternlicht said. The few acquisitions the company does make, he said, will probably come in overseas markets.

Nanula, who has known Sternlicht since the two attended Harvard University in the mid-1980s, served two stints as Disney’s chief financial officer. The first was for three years starting in 1991, and then again in 1996 when Stephen Bollenbach abruptly quit to become chief executive of Starwood’s biggest rival, Hilton Hotels.

Nanula picked up some operating experience when he was asked to head Disney’s chain of retail stores several years ago. In fact, Eisner has frequently tapped the young executive--the youngest CFO of a Fortune 500 company--to deal with special problems and projects, including working on hotel and real estate deals, both as chief financial officer and as head of strategic planning.

Disney said it has not picked Nanula’s successor. It will name him or her “in due course,” Eisner said, adding that Nanula will remain on the job until June 1. In a statement, Eisner lauded Nanula, saying that “Starwood represents a marvelous advancement for a man of his talents.”

Despite his accomplishments, Nanula’s name has rarely, if ever, come up as a potential successor to Eisner. One reason is that, barring any unforeseen health problems, Eisner is contractually locked in for another decade to run the company.

Despite having heart bypass surgery three years ago, Eisner has refrained from designating anyone to succeed him, in the wake of the ill-fated selection of Michael Ovitz as company president. Ovitz left in December 1996 after just 15 months at Disney.

Nanula said he took the job at Starwood not because his chances for advancement were slim at Disney, but because Starwood offered him a chance to “run a big company smoothly, efficiently and productively.”

“I think this is a good match for my skill set,” he said.

The news comes two weeks after Starwood announced a corporate restructuring into separate hotel and gaming groups. Key Westin and Caesars officials were promoted to head those divisions.

Starwood shares rose $2 to close at $52.75 on the New York Stock Exchange.