Estée Lauder (EL) stock is sinking Thursday after the beauty company withdrew its 2025 guidance and slashed its quarterly dividend by 47%. The dramatic move comes amid leadership changes and ongoing challenges in the Chinese market, with Stéphane de La Faverie set to assume the mantles of president and CEO on January 1, 2025.

Former LVMH North America Chairman Pauline Brown joins Catalysts to discuss the company's leadership transition.

"This is a failure of governance by the board," she stated, emphasizing that the issue extends beyond individual leadership to the broader challenge of managing executive succession and business pipelines.

Brown argues that the CEO change should have occurred "much sooner," describing the current leadership as being on a "downward slope" since 2021. "I don't blame the market for reacting as it is," she tells Julie Hyman and Brad Smith.

The leadership transformation goes beyond the CEO position. Family members Jane and William Lauder — the grandchildren of the company's founders and namesakes Estée and Joseph Lauder — are stepping away from their operational roles, which Brown believes could fundamentally alter the company's long-term trajectory. Jane served as the brand's chief data officer and executive vice president of enterprise marketing, while William served as executive chairman.

Jane and William will continue to serve on the company's board alongside Gary Lauder and Ronald Lauder (Jane's father). Leonard Lauder will remain as chairman emeritus of the board.

"I don't know if the company can stay intact as we've known it over the last few decades," Brown tells Yahoo Finance.

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This post was written by Angel Smith