Management Turnover as Change Agent

Thursday, November 6, 2014

Executive Turnover Jumps As Do Private Employment Rolls - Economy Humming?

Liberum Research has been predicting for the last number of months increased executive turnover at public companies.  While turnover has not lived up to Liberum's predictions, October's latest figures have moved in a far more positive direction and along the path Liberum has been forecasting.  October's growth in executive turnover coincides with ADP's latest Employment Report released November 5, that showed an unexpected increase in private employment.  Liberum expects the same will be true with the U.S. Labor Department's (BLS) Employment figures scheduled for release at the end of this week.
According to today's ADP October Employment Report:

Private-sector employment increased by 230,000 from September to October, on a seasonally adjusted basis.

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is steadily picking up pace. Job growth is strong and broad-based across industries and company sizes. At this pace of job growth unemployment and underemployment is quickly declining. The job market will soon be tight enough to support a meaningful acceleration in wage growth.”

As for Liberum's latest figures, three out four key categories experienced declines in October 2014 over the same month of October 2013, however, Liberum saw consistently large increases in all four categories when October 2014's turnover figures were compared to the same totals for the previous month of September 2014.  Liberum expects executive turnover will continue to grow as we move into the later Fall and early Winter months.  If turnover growth continues to grow, it will represent another positive sign for North America's economic recovery.   

Liberum Comparison Breakdown of Key October Executive Turnover Figures

Below is a breakdown of Liberum's key executive category percentage changes for October 2014 compared with October a year earlier and the previous month of September 2014.   
October 2013 Compared to October 2014 

For October 2014 declines in turnover occured in three key categories.  CFO changes declined 9% from  October a year earlier, C-level changes declined 4%, and board of director changes declined 12%.  CEO changes on the other hand, increased a mere 1%.

September 2014 Compared to October 2014 

The month to month changes in executive turnover, September 2014 to October 2014, however, showed significant increases in all four key categories.  CEO changes increased 22%, CFO changes increased 4%, C-level changes increased 16%, and board of director changes increased 25%.    
  
Below are the overall turnover totals for October 2014.  The information is just illustrative of how institutional investors could view executive turnover and its possible relationship with a company's performance.  

KEY CEO CHANGES - OCTOBER 2014
33 COMPANIES WITH CEO CHANGES WORTH RE-EXAMINING 
According to Liberum's Management Change Database, a total of 213 CEO related changes occurred during October 2014. Here are 33 from the time period that caught my eye.   By significant, I'm looking for situations where I think a particularly strong or weak choice has been made - given the apparent current state of the company - or where there is an interesting special situation. (Anyone using Liberum's database could do the same kind of analysis for other key titles, e.g., CFOs, COOs, CMOs Presidents, etc.)

DATE  COMPANY TICKER  EXCHANGE  MARKET CAP $ MILLIONS    
10-01 Activecare Inc  ACAR $10
10-01 Centrus Energy Co  LEU  $38
10-06 Unisys Corporation  UIS  OTC  $1044
10-07 Niko Res NKO  TORONTO  $85
10-07 Vonage Holdings Corp VG  NYSE   $667
10-08 Purespectrum, Inc  PSRU  OTC  $263
10-08 The Gap Inc.  GPS  NYSE  $15946
10-09 Advanced Micro Devices, Inc.  AMD  NYSE  $2287
10-13 Adcare Health Sys  ADK  NYSE  $76
10-13 J.C. Penney Co., Inc.  JCP  NYSE  $2242
10-14 Computer Task Group, Inc  CTG  NASDAQ  $198
10-14 Dex Media, Inc.  DXM  NSADQ  $134
10-14 Quiksilver, Inc.  ZQK  NYSE  $304
10-15 Appiphany Technol  APHD  OTC  $93
10-15 Bg Group BG  LONDON  $346
10-15 Innovative Softwa  INIV  OTC  $22
10-15 Midway Gold Corpo  MDW  NYSE  $182
10-15 Navidea Biopharma  NAVB  NYSE  $200
10-15 Statoil ASA (ADR)  STO  NYSE  $70382
10-16 Darden Restaurants, Inc.  DRI  NYSE  $6536
10-17 Richmont Mines Inc. (USA)  RIC  NYSE  $120
10-21 C T I Group (Hold  CTIG  OTC  $10
10-21 First Colombia Go  FCGD  OTC  $16
10-21 SeaChange Intl  SEAC  NASDAQ  $211
10-22 Golden Predator M  GPY CVE  $3
10-24 Thales  HO  France  $7738
10-27 Cerulean Pharma I  CERU  NASDAQ  $83
10-28 22nd Cent XXII  NYSE  $129
10-29 sanofi-aventis (ADR)  SNY  NYSE  $118900
10-29 Shanda Games Limi  GAME  NASDAQ  $1740
10-30 F5 Networks, Inc.  FFIV  NASDAQ  $9077
10-31 Carnival Corporation  CCL  NYSE  $31197
10-31 Oragenics Inc  OGEN  NYSE

OCTOBER 2014 MANAGEMENT CHANGE STATISTICS
C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1420
TOP INDUSTRY SECTORS
> Drugs/Biotech - 173
> Banking - 107
> Energy - 106



















OCTOBER 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 213
TOP INDUSTRY SECTORS
> Drugs/Biotech - 21
> Energy- 21> Retail - 14
> Metals/Mining - 13







OCTOBER 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 191
TOP INDUSTRY SECTORS
> Drugs/Biotech - 21
> Energy - 20
> Real Estate - 15
> Software - 15





OCTOBER 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 452
TOP INDUSTRY SECTORS
> Drugs/Biotech - 73
> Banking - 41
> Energy - 22



















Investors need to diligently monitor key management changes. Certain management changes should be viewed as a "special situation" that can have a direct and major impact on a company's performance and share price.
  • New CEOs know more than the market about the company.  Their decision to take the position contains information.  Likewise the departing CEO. 
  • Likewise departing CFOs New CEOs will bring new skills and often-times a new direction.  This is normally significant, and worth analyzing.
Liberum Research, the independent research firm focused on corporate management change, has developed an online relational database designed to assist institutional investors develop special situation investment ideas related to executive management change. While special situation investing traditionally revolves around corporate restructuring, spin-offs and acquisitions, executive management changes, depending on the circumstances, can represent a short or long-term investment opportunity. 


ABOUT LIBERUM

The largest database of C-level executive change at public companies.  Frequently quoted in the financial press, Liberum helps investors monitor this important, continuous stream of investment events.  The data is also useful for investment bankers, private equity, executive search and consulting firms.  The data can be used in numerous ways. Daily customizable alerts, a searchable database, custom reports, xml feeds.   Liberum clients get the data the way they can best exploit it.  Get a short trial call 212-988-5497 or email richard@twst.com.   

Thursday, October 2, 2014

Latest Executive Turnover Data Does Not Correlate With Employment Growth Figures

The latest executive turnover numbers remain far more muddled than Liberum expected. Both the September totals and the latest quarterly executive turnover numbers have failed to indicate a trend for where executive turnover will be going in the near future. To make matters more complicated, Liberum Research's latest executive turnover numbers have not correlated with the job growth numbers that were just released October 1, from ADP or with the latest decreased number of people seeking unemployment benefits released from the government.  ADP's September Employment Report results were far more positive than the executive turnover numbers Liberum tracked over the same period.  This lack of correlation between these two data categories is a bit unusual.  It is possible the employment numbers to be released from U.S. Government's Bureau of Labor Statistics (BLS) later this week, will correlate more closely with Liberum's latest executive turnover figures, we will just have to see.


Private sector employment increased by 213,000 jobs from August to September.

"September’s jobs added number marks the sixth straight month of employment gains above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP. “It’s a positive sign for the economy to see the 200,000-plus trend continue.”
Mark Zandi, chief economist of Moody’s Analytics, said, "Job gains remain strong and steady. The pace of job growth has been remarkably similar for the past several years. Especially encouraging most recently is the increasingly broad base nature of those gains. Nearly all industries and companies of all sizes are adding consistently to payrolls.” 

While Liberum has been a bit surprised about the latest executive turnover numbers, we remain positive about the American Economy and continue to expect executive turnover numbers to trend upward as we move into the Fall and early Winter months. 

Liberum has put together below, a six plus year quarterly breakdown of executive turnover totals for CEOs, CFOs and C-level executives covering North America. Most of the below quarterly numbers showed continuing declines until the second quarter of 2011.  At that point, the numbers began to reverse themselves.  Turnover at the executive levels of corporate America began to grow but not consistently and that trend has continued.  

Anyone investing in the market must pay special attention to executive turnover both at the top and the middle executive ranks.  Failure to do so, will result in lost opportunities or worse. To take advantage of these changesget a free trial to Liberum's OnlineManagement Change Database.  Just call Richard at 212-988-5497 or send an email to richard@twst.com requesting your free trial.  Within a day of your trial, you will have access to nearly 200,000 data points from which you can generate ideas and daily information on who ischanging jobs at the top.
Below is a simple table outlining the quarterly turnover totals as registered through Liberum Research's Management Change Database for 2008 through the third quarter of 2014 for CEO, CFO and overall C-level turnover.  

 Total CEO Turnover Comparisons   
                        
 Year 2008    2009 2010 2011 2012 2013 2014   
1st Quarter 745491 388346 680 583 500 
 2nd Quarter596 380321 581665 619 527
 3rd Quarter533409298713 636 627 557
 4th Quarter461430328697 673 636NA
 Annual Total2,3351,7101,3352,337 2,6542,465 1,584

 Total CFO Turnover Comparisons 
                 
 Year 2008    2009 2010 2011 2012 2013 2014   
1st Quarter 593 332 296 280 640 495  468
 2nd Quarter551 326 273 404612 557   595 
 3rd Quarter438 279 256629 598582  550
 4th Quarter364 313  258   476569562 NA 
 Annual Total1,9461,250 1,0831,789 2,4192,196 1,613


 Total C-level Turnover Comparisons
 Year 2008    2009 2010 2011 2012 2013  2014   
1st Quarter 6735 4061 34532863 5442 3971 4083 
 2nd Quarter7430 5051 3199 404150364102 4117 
 3rd Quarter4865 3690 25225349 423541233950 
 4th Quarter4277 3439  2381   4596 41974196NA 
 Annual Total23,307 16,241 11,55516,849 18,91016,392 12,150


The latest monthly comparison figures with regard to executive turnover for September 2014 as compared with those of September 2013 and August 2014 and September 2014 are as follows:  
  • CEO turnover for September 2014 declined 17% from that of September 2013, CFO turnover declined 7%, C-level turnover declined 5% and Board of Director turnover declined 14%.  
  • The the month to month change from August 2014 to September 2014 was a bit more positive. CEO turnover increased 11% for CEOs, declined 12% for CFOs, increased 6% with regard to C-level changes and declined 9% for Board of Director changes.  
In the below report, Liberum has focused on forty five CEO changes of special significance for the month of September out of a total of 175. We have also put together the overall turnover figures for the month of September 2014.  The below information is just illustrative of how investors could view executive turnover and its possible relationship with a company's performance. The same could be done for COOs, Presidents, Chairmans, etc. just through the Liberum database.

DATE       COMPANY   TICKER    EXCHANGE   MARKET CAP $ MILLIONS
09-01 American International Group, Inc. AIG  79991
09-01 Luxottica Group S.p.A. (ADR)  LUX  25308
09-02 Danaher Corporation  DHR  53546
09-02 Gordmans Stores  GMAN  70
09-03 Baldwin Technology Co. BLD
09-03 Trans World Entertainment Corporation  TWMC  115
09-03 Westell Technologies, Inc.  WTSL  70
09-03 Willbros Group, Inc. WG  530
09-04 Alcatel-Lucent (ADR)  ALU  9377
09-05 First Mountain Bn  FMBP  9
09-05 Triple-S Mgmt Cl  GTS
09-06 Positron Corp  POSC
09-08 Capital Product P  CPLP  918
09-08 Hertz Global Holdings, Inc.  HTZ  12522
09-08 International Paper Company  IP  20659
09-08 Reneuron Group  RENE.L
09-09 Lighting Science  LSCG  37
09-11 Altisource Portfo  ASPS  2252
09-11 Mri Interventions  MRIC  68
09-12 Vicon Inds Inc VII  16
09-16 ATLANTIC POWER CORP  AT
09-16 Landec Corporation  LNDC  337
09-17 Agilent Technologies Inc.  A
09-17 Insulet Corporati  PODD  2033
09-18 Continental Resrc  CLR  24783
09-18 Hudson City Bncp  HCBK
09-18 Oracle Corporation  ORCL  175100
09-19 JetBlue Airways Corporation  JBLU  3210
09-19 Solaris Power Cel  SPCL
09-22 Medijane Hldgs In  MJMD  12
09-22 Response Biomedic  RPBIF  9
09-22 Thoratec Corp.  THOR  1495
09-24 Activecare Inc  ACAR  14
09-24 Aja Cannafacturin  AJAC   339
09-24 Malvern Bancorp,  MLVF   71
09-24 That Marketing So  VSHGD  15
09-25 Sears Canada Inc  SCC.TO  1299
09-25 Success Holding G  SHGT  51
09-26 The Pep Boys - Manny, Moe & Jack  PBY  503
09-29 American Apparel, Inc.  APP  140
09-29 AMN Healthcare Services, Inc.  AHS  719
09-29 Coty Inc. Class A  COTY  5903
09-29 Loton Corp  LTNR  268
09-29 Lyondellbasell In  LYB  56925
09-29 Protalix BioTherapeutics Inc. PLX  221

SEPTEMBER 2014 MANAGEMENT CHANGE STATISTICS
C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1223
TOP INDUSTRY SECTORS
> Drugs/Biotech 
- 137
> Banking  - 124
> Business Services - 84
SEPTEMBER 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 175
TOP INDUSTRY SECTORS

> Banking - 15
> Drugs/Biotech - 14
> Insurance -14
> Manufacturing - 14
SEPTEMBER 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 184
TOP INDUSTRY SECTORS

> Business Services - 13
> Energy - 13
> Drugs/Biotech - 11
> Manufacturing - 11
SEPTEMBER 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 361
TOP INDUSTRY SECTORS

> Drugs/Biotech - 51
> Banking - 24
> Business Services - 22
Investors need to diligently monitor key management changes. Certain management changes should be viewed as a "special situation" that can have a direct and major impact on a company's performance and share price.
  • New CEOs know more than the market about the company.  Their decision to take the position contains information. Likewise the departing CEO. Likewise departing CFOs.
  • New CEOs will bring new skills and often-times a new direction.  This is normally significant, and worth analyzing.
Liberum Research, the independent research firm focused on corporate management change, has developed an online relational database designed to assist institutional investors develop special situation investment ideas related to executive management change. While special situation investing traditionally revolves around corporate restructuring, spin-offs and acquisitions, executive management changes, depending on the circumstances, can represent a short or long-term investment opportunity. 
Liberum's ten year old database offers institutional investors the ability to examine an individual company, sector/s, group of companies, and/or geographic region/s/ locations via a metric of one's own choosing.  You can use the information individually or in combination with a number of other financial tools to develop unique investment ideas.