Crown Castle in holding pattern ahead of CEO search

The firm announced last week that CEO and longstanding company employee Jay Brown will retire early in the new year.

The news of his departure is hardly a surprise, given the viciously-worded attack shareholder Elliott Investment Management launched against the company and Brown in particular late last month. The activist investor outlined a proposed new strategic vision for the company, which included the replacement of its management and board of directors, and the possible sale of its fibre business.

"The Company's strategy, led by CEO Jay Brown since 2016, has been a failure, as demonstrated by the breathtaking magnitude of its underperformance," Elliott said. That was just one of a number of scathing comments about Crown Castle's recent performance and its management in the letter it penned to the board to accompany its campaign for change.

Crown Castle was restrained its response, pledging to engage with Elliott, but also expressing confidence from the board in the leadership of the company.

Brown's departure suggests that confidence didn't last long, although admittedly there is no hint of animosity in yet another carefully-penned statement from the company announcing his decision to go.

"On behalf of the Board, I want to thank Jay for his nearly 25 years of service at Crown Castle, including more than seven years as CEO," said company chairman P. Robert Bartolo. "Since joining our company, Jay has helped establish Crown Castle as the nation's leading provider of shared communications infrastructure connecting thousands of cities and communities to essential data. We are grateful for his contributions and unwavering commitment to our people, and we wish him the very best."

A textbook comment. But presumably Crown Castle doesn't expect anyone to believe that the timing of Brown's retirement – he's not yet 50, incidentally – is a coincidence. However, it's clearly not keen to send the message that he was pushed either.

All of which leaves industry watchers guessing as to the firm's next move.

Crown Castle has installed board member Anthony Melone as its interim CEO, and notes that it will carry out a search process for a permanent holder of the post. Melone, who is a former CTO of Verizon Communication, amongst other things, is a safe pair of hands for now, but his appointment doesn't tell us anything about the firm's future.

Aside from the fact that Elliott has made an impression, that is.

For its part, Elliott has described Brown's departure as "a step in the right direction toward a new chapter of value creation," at Crown Castle.

Consistent with our previous statements, we believe that additional significant changes are needed to ensure that Crown Castle is best positioned to fulfill its potential for shareholders. We look forward to continuing our dialogue with the Company's Board regarding the necessary next steps, including a comprehensive review of the Fiber business, meaningful governance enhancements and a robust and transparent search process for Crown Castle's next CEO," a statement released by Elliott on behalf of Managing Partner Jesse Cohn and Senior Portfolio Manager Jason Genrich reads.

Elliott is going to continue to push its case, and it looks like it wants to have a say in the selection of the new chief executive too.

Elliott clearly has a lot of sway. But until the CEO's office is occupied on a permanent basis, we can't say to what extent – if any – its plans for the company will be baked into its strategy.