A MAJOR LESSON IN SUCCESSION PLANNING: TOM PRITZKER PICKS UP TORCH FROM LATE FATHER AND THE HYATT EMPIRE DOESN’T MISS STEP ONE

The recent death of billionaire Jay A. Pritzker was a pivotal event for the Chicago business community, marking an emotional turning point for the far-flung empire of the city’s wealthiest family.

While the family’s tireless visionary and dealmaker is gone, no major strategic shifts are expected in the Pritzker Organization as Jay’s eldest son, Thomas J. Pritzker, assumes his role in the family councils collectively led by his uncle, cousins and other relations.

Jay and Tom “were joined at the hip,” says one family insider. “It was hard to tell where one’s mind ended and the other’s began.”

In reality, the transfer of leadership from father to son had been going on for years, accelerating after the family patriarch suffered a stroke 18 months ago. He died last month of a heart attack at age 76, worth an estimated $6 billion.

The passing of the Pritzker torch is a good example of succession planning for advisers to follow, even though the family operations they work with are on a less grand scale.

During a long recuperation after the stroke, the elder Mr. Pritzker had spent much time in California, but over the last year, he’d participated in overseas hotel deals and the family’s business discussions.

Meanwhile, Tom Pritzker, 48, moved beyond his longtime oversight of the privately held Hyatt Corp. hotel and resort chain, a pillar of the family’s wealth, to a more strategic role.

“Most of the day-to-day management ended in Tom’s lap,” says Allen Turner, chairman of the executive committee of Hyatt International Corp. and an adviser to the family for 34 years. “That transition was essentially complete. We didn’t have to do anything except change some titles.” (Mr. Turner was designated to speak for the Pritzker family, whose members declined to comment.)

now Tom’s in charge

Late last month, Tom Pritzker, who had been president of Hyatt Corp. since 1980, was named chairman and chief executive, as well as chairman of its Hyatt International Corp. subsidiary, which operates 75 hotels and resorts outside of the U.S., Canada and the Caribbean.

Nicholas J. Pritzker, Jay’s 53-year-old cousin, also takes a top leadership role. He will serve as chairman of the executive committee and vice-chairman of Hyatt Corp. and Hyatt International. Douglas Geoga, president of Hyatt Hotels and Resorts, will report to both Nick and Tom.

“Nick’s role is to be a confidant of Tom,” says Laurence Geller, CEO of Chicago-based Strategic Hotel Capital Inc. A former Hyatt executive, he owns six Hyatt-managed properties.

Nick, whose late father, Jack Pritzker, and Jay’s, the late A.N. Pritzker, were brothers, will also be chairman of two Hyatt subsidiaries: Hyatt Development Corp., which creates Hyatt hotels, resorts, casinos and other properties; and Hyatt Equities LLC, which owns 32 of the 109 Hyatt hotels operated by the parent firm in the U.S., Canada and the Caribbean.

And considering Jay’s heavy involvement in developing new markets for Hyatt hotels, Mr. Geller says, “I suspect Nick will get more involved on the international side.”

Penny Pritzker, 39, Tom’s first cousin, will become chairman of Classic Residence by Hyatt, a retirement housing subsidiary that she has run as president since its inception. She also oversees industrial real estate and the family’s interest in Coast-to-Coast Financial Corp., the Las Vegas-based parent of Superior Bank FSB, a $1.1-billion-asset thrift based in Oakbrook Terrace, Ill.

At Marmon Group Inc., the $6 billion conglomerate of manufacturing companies whose president and CEO is Jay’s 72-year-old brother, Robert, the title of chairman held by Jay will not be filled “out of respect for Mr. Pritzker,” a spokesman says.

couldn’t help stealing show

Jay Pritzker was, undoubtedly, a larger-than-life success story who inevitably stole the spotlight even as he tried to avoid it. From particle board to biotech to corporate jets, he invested opportunistically, yet seldom took the opportunity to sell.

But his legacy will be his human touch and his generous philanthropy as much as the creation of a thriving, tight-knit family enterprise.

The spotlight now turns to the next generation, particularly Tom, who in many ways is not only a son but a clone of his father.

“On the phone, it could be the same guy,” says Mr. Geller, who was chief operating officer of Hyatt Development from 1984 to 1990.

In terms of deal-making, Tom is expected to take over Jay’s principal role, assisted by J. Ira Harris, the Chicago investment banker who became vice-chairman of the Pritzker Organization about a year ago.

“My role is like an adviser; I open up doors and use some of my Rolodex,” says Mr. Harris, 60.

While similar in personality and style to his father, the family’s new leader is considered more cerebral and detail-oriented than his father. A serious collector of Tibetan art, Tom Pritzker has a home in Nepal.

Jay’s other children — two sons and a daughter — are less involved in running the family business.

But the children of Jay’s brother Donald, who died in 1972 at the age of 39, are quite active, especially Penny and her brother J. B. Pritzker, 34, who made an unsuccessful run for Congress last year. He heads New World Equities, the family’s venture capital arm. Their brother Tony, 38, has headed several Marmon Group entities, but not currently, according to a spokesman.

In addition, Marmon CEO Robert Pritzker has five children who aren’t active in the family business.

“The thrust of the family will be the same,” says Hyatt’s Mr. Turner. “The Pritzker philosophy is, if you’re not moving ahead, you’re falling behind.”

Crain News Service