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Illinois Tool Works: CEO Santi Was Excellent, but We Like the Succession Plan

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Illinois Tool Works ITW announced the departure of CEO Scott Santi, effective Jan. 1, 2024. Santi will remain as board chair until March 1. The firm will certainly miss Santi, but we like the choice of Christopher O’Herlihy, and we’re not surprised by the announcement. More importantly, from a shareholder standpoint, ITW’s enterprise and 80/20 strategy is institutionalized, meaning its operating model isn’t based on one person, nor is it governed by top-down edicts. Quite the contrary, the businesses must apply the playbook, but how they choose to do so is done on a bottoms-up basis.

Given that O’Herlihy has been intimately involved with ITW’s strategy for a long time, we think the selection makes complete sense. The firm has a peculiar structure in that Santi’s successor was vice chair of the board, but we like this approach. O’Herlihy has also been with ITW since 1989 and moved into increasing areas of responsibility in the operating businesses to much success. He is more than prepared to take the reins from Santi, in our view.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Joshua Aguilar

Director of Equity Research, Resources
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Joshua Aguilar is the director of resources equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Aguilar joined Morningstar in 2016 as an associate on the financials team, and he was promoted to analyst on the industrials team in 2018 and to senior analyst in 2022. He has served as associates coordinator since 2021 and led Morningstar's diversity efforts as DEI co-chair since 2020. Aguilar has been a mentor to several associates on their paths to becoming analysts. He also has hosted a Morningstar earnings town hall, participated in analyzing Morningstar stock, and been a strong contributor through both client interactions and his General Electric stock call. Aguilar co-authored an Outstanding Research Achievement-winning piece with colleague Kris Inton on CEO compensation in 2021. He also has taught Morningstar's model to new hires for many years as part of the valuation committee.

Before joining Morningstar, Aguilar was a practicing business transactional attorney in Florida. He graduated magna cum laude with a bachelor's degree in political science and criminology from the University of Florida. He also has a Master of Business Administration from Rollins College and a Juris Doctor from Wake Forest University.

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