UPDATE 3-Avon's Jung to leave board early; new CEO in spotlight

* Jung to stay on as a senior advisor through April 2014

* Fred Hassan to become nonexecutive chairman in January

* Move shows transition moving ahead under McCoy-analysts

* Shares up 6.7 percent

(Adds analyst comment, background)

By Jessica Wohl and Phil Wahba

Oct 5 (Reuters) - Avon Products Inc

will close the book on the Andrea Jung era atthe end of the year, clearing the way for new Chief Executive Officer Sheri McCoy to turn aroundthe struggling beauty products company.

Jung, whom McCoy replaced as CEO in April, will step down as executive chairman and boardmember on Dec. 31, more than a year early, and stay on as a senior adviser, the company said onFriday.

The move gives McCoy more room to implement her own plan to turn around the world's largestdirect seller of cosmetics, whose sales have slid in key markets and which is trying to settle aU.S. bribery probe.

Avon shares rose 6.7 percent to $17.30 on the news.

"Jung's exit marks the end of the transition to the new management team at Avon, whichshould be positively received by the market," said Atlantic Equities analyst Victoria Collin.

Fred Hassan, a turnaround expert and dealmaker who is currently lead independent director atAvon, will become nonexecutive chairman on Jan. 1.

Hassan, who has been on Avon's board since 1999, is also a managing director and partner atprivate equity firm Warburg Pincus. He was chairman and CEO of Schering-Plough Corp from 2003until 2009.

But investors are focused on former Johnson & Johnson

executive McCoy and await herplan for fixing Avon.

Jung was pushed out of the CEO post after a number of major mistakes, ranging from severalbotched restructurings, dwindling profitability and a probe into whether Avon officials brokeU.S. bribery laws overseas as the company sought to develop new markets.

In the first six months of McCoy's tenure, Avon has begun talks to settle the briberyinvestigation, which has cost hundreds of millions, and hired a new top lawyer.

In August, after Avon reported another poor quarter, McCoy said her priorities were tostabilize revenue, rein in costs and make the job of a sales representative more attractive. Shedid not say when she would announce a new strategic plan.

In April, Avon said Jung would be its executive chairman for two years. Instead, she willassume the senior advisor role on Jan. 1, and her contract for that position will run throughApril 2014, the company said on Friday.

Wall Street and Avon shareholders had severely criticized Jung and the board she oversaw forletting the company's problems fester and for what some saw as a lack of serious considerationof a $10 billion unsolicited takeover bid this year by smaller rival Coty Inc.

Some analysts hope Friday's news means further changes to the board are in the offing.

"I think changing several members of the board at Avon is the right thing to do, especiallyafter their awkward dealing - or lack thereof - with Coty," said Sanford Bernstein analyst AliDibadj. "My sense is that this is just the start of more moves there."

In April, Avon named former Campbell Soup Co

CEO Doug Conant to the board.

Several board members have been directors since before Jung took the reins, includingHassan, former Time Inc CEO Ann Moore, Stern Group Chairman Paula Stern and Yankee Hill CapitalManagement Managing Director Lawrence Weinbach.


Graphic on Avon's share price and key events:



Jung, 54, joined Avon in January 1994 as president of product marketing for Avon U.S. afterholding key positions at companies like luxury retailer Neiman Marcus Group. A board membersince 1998, she became CEO in 1999 and was a big draw for Avon's army of direct salesrepresentatives, many of whom liked to see a successful, glamorous woman at the top of thecompany.

One of the highest-profile women in U.S. business, Jung was in the Top 10 of FortuneMagazine's 50 Most Powerful Women in Business list from 2007 through 2010.

Her popularity was one reason Avon had given last year for keeping Jung on as an executivechairman after her stint as CEO.

The company's international sales grew by leaps and bounds in the first years of her tenure.But things later soured, as problems like an exodus of U.S. sales representatives acceleratedand more recently, as sales started to shrink in Russia, China and Brazil, the fastest-growingmarkets for beauty markets.

Still, Jung was one of the most prominent U.S. CEOs and continues to sit on the boards ofApple Inc

and General Electric Co.

Jung will maintain her base salary of $1 million and other compensation and benefits, aspokeswoman said.

(Reporting by Jessica Wohl, Brad Dorfman and Phil Wahba in Chicago; Editing by Gerald E.McCormick and Lisa Von Ahn)

((jessica.wohl@thomsonreuters.com)(312)(408-8132)(Reuters Messaging:jessica.wohl.thomsonreuters.com@reuters.net))

Keywords: AVON JUNG/