• by Thom Forbes  @tforbes, April 10, 2012

Sherilyn (Sheri) S. McCoy, a trained scientist who has held a variety of positions at Johnson & Johnson including running marketing for skin-care brands such as Neutrogena, Aveeno and Lubriderm, has accepted the CEO position at Avon after months of wooing because, according to one source quoted in the Wall Street Journal, it "is an iconic brand."

But it is also a troubled one, facing an unsolicited $10 billion takeover bid from Coty, investigations by the Securities and Exchange Commission over possible bribery of foreign officials, sliding sales and a tumbling stock price.

Any Coty deal is probably dead, according to Barclays Capital analyst Lauren Lieberman. “Unless there’s something notable [in Ms. McCoy’s contract] in terms of what she’s entitled to if she sells the company, it’s a pretty definitive statement they’re not interested,” she tells the Financial Times’ Barney Jopson and Alan Rappeport. "It’s unlikely she’d leave [J&J] for something that isn’t a real job,” Lieberman says.

McCoy, 53, who has a master’s degree in chemical engineering from Princeton and an M.B.A. from Rutgers, has been the head of J&J’s pharmaceutical and consumer businesses since January 2011. J&J reportedly did its best to retain her after handing the CEO position to Alex Gorsky in late February, but the lure of the challenge of running her own show was too great to resist. 

She is walking away from a lucrative retirement package at J&J, if the guesstimates provided by Mark Reilly, a partner at Compensation Consulting Consortium LLC, are accurate. He tells the WSJ’s Joann S. Lublin, Jonathan D. Rockoff and Emily Glazer that her unvested stock options and restricted stock units were worth about $3.1 million at closing yesterday and she is also leaving a retirement benefit valued at about $6 .4 million on the table.

Les Berglass, chairman of executive search group Berglass & Associates, tells the FT that fixing Avon is a “burdensome challenge” in itself. “The last thing you need is for a troubled company to have a new leader and be distracted by a takeover bid.” 

Indeed, Avon “appears to be making the case that it can turn around the company on its own,” Andrew Martin writes in the New York Times, quoting it lead director, Fred Hassan, who says McCoy has a “unique combination of strategic and finely honed operational skills, a significant turnaround track record, global experience and people leadership.”

McCoy overhauled J&J’s pharmaceutical division in a “wrenching process that involved reorganizing the business at a time when patents on important drugs were expiring,” Martin points out –- experience that should come in handy. “She knows something about problems, and she may be able to do something about it,” Les Funtleyder, a portfolio manager at Miller Tabak & Company, which owns Johnson & Johnson stock, tells Martin.

Fred Hassan, the former chairman and CEO of Schering-Plough who sits on Avon’s three-person CEO search committee, knew McCoy from pharmaceutical circles and began pursuing her as soon as she lost the J&J race, blogs Patricia Sellers in Fortune. 

“Most importantly for an Avon workforce that has been demoralized and downsized, McCoy seems to have the right leadership style,” Sellers writes. “She is known as a collaborative manager who talks openly about juggling career and family and urges people at J&J to pay attention to both. She is a mother of three sons -- no daughters. But at ‘the company for women,’ as Jung labeled Avon, such work-life experience is practically the price of entry.”

One thing McCoy lacks is any experience with Avon’s direct sales model, and some Wall Street types are worried that Avon is passing on an opportunity to hitch itself to someone’s else’s rocket booster.

“She doesn’t have direct sales experience, and there’s concern that no deal is going to happen,” Morningstar analyst Lauren DeSanto tellsBloomberg’s Matt Townsend. “Not to say that she isn’t a capable leader, but Avon does face a unique set of problems that are pretty serious.”

Sanford C. Bernstein analyst Ali Dibadj points out that it may take a while for McCoy to get up to speed but observes that it probably would not be helpful for outgoing CEO Andrea Jung to linger around the executive suite (she will remain as chairman for two years and is expected to be active in the Avon Foundation). 

But BMO Capital Markets' Connie Maneaty sees good news in that Avon has landed a top-notch executive.

“Concerns that investors had that a new CEO wouldn’t have authority” with Jung on the board should be alleviated, she tells Townsend. “Someone who has gotten as high as Sheri has in a very big organization is not going to come to Avon in any subservient role.”