Morningstar

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

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Securities In This Article
Illinois Tool Works Inc
(ITW)

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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About the Author

Joshua Aguilar

Director
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Joshua Aguilar is a director, AM Resources, for Morningstar*. After previously covering multi-industrial conglomerates and financial services firm, he is now assuming coverage of exploration and production firms in the oil and gas industry.

Prior to joining Morningstar in 2016, Aguilar was a practicing business transactional attorney in Florida. Aguilar joined Morningstar in 2016 as an Associate on the Financials team, was promoted to Analyst on the Industrials team in 2018, and Senior Analyst in 2022. He’s also served as our Associates Coordinator since 2021 and led our diversity efforts as DEI co-chair since 2020. Aguilar has served as a key mentor to several Associates on their path to Analyst. He’s also hosted a Morningstar earnings townhall, participated in Analyzing MORN, and been a strong contributor through both client interactions and his GE stock call. Josh co-authored an Outstanding Research Achievement (ORA)-winning piece with Kris Inton on CEO compensation in 2021. He’s also taught the model to new hires for many years as part of the Valuation Committee.

Aguilar graduated Magna cum laude with a B.A. in political science and criminology from the University of Florida. He also has an MBA from Rollins College and a J.D. from Wake Forest University. Aguilar remains an active member of the Florida Bar Association.

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