Executive turnover is finally beginning to show signs of growth again, a positive sign for the North American economy. The last number of months executive turnover was rather slow in comparison to a year earlier but we are beginning to see signs of a slight growth in turnover among the executive ranks. The increase in executive turnover seems to correlate with the latest more positive news regarding job growth in the Amercican economy. Earlier on Friday morning April 4, the U.S. Department of Labor Bureau of Labor Statistics (BLS) announced March employment Report and as expected the numbers were reasonably positive. According to the BLS Report,
Total nonfarm payroll employment rose by 192,000 in March, and the unemployment ratewas unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today.Employment grew in professional and business services, in health care, and in miningand logging.
Earlier in the same week ADP released it latest Employment Report and the job growth numbers were greater than anticipated. According to the ADP Employment Report released April 2,
Private-sector employment increased by 191,000 from February to March, on a seasonally adjusted basis.
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- Small businesses (1-49 employees) +72,000
- Medium businesses (50-499 employees) +52,000
- Large businesses (500 or more employees) +67,000
Mark Zandi, chief economist of Moody’s Analytics, said, "The job market is coming out from itsdeep winter slumber. Job gains are consistent with the pace prior to the brutal winter. The gainsare broad based across industries and business size classes. Even better numbers are likely incoming months as the weather warms.
The American economy appears to have turned the corner but is still far from out of the woods. With winter beginning to fade the economy seems to be percolating. Unemployment continues to slowly decline and job growth is starting to show real incremental improvement. Top executives in both small and large firms also find themselves in a similar situation. Opportunities are growing for top executives and at the same time underperforming firms are now more likely to change deck chairs as the overall economy shows improved signs of life. Liberum Research expects to see increased turnover in the executive ranks as we move through the Spring and into the Summer.
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 this point, the numbers began to reverse themselves. Turnover at the executive levels of corporate America began to grow but not consistently.
Below is a simple table outlining the quarterly turnover totals as registered through Liberum Research's Management Change Database for 2008 through the first 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 | 745 | 491 | 388 | 346 | 680 | 583 | 500 |
2nd Quarter | 596 | 380 | 321 | 581 | 665 | 619 | |
3rd Quarter | 533 | 409 | 298 | 713 | 636 | 627 | |
4th Quarter | 461 | 430 | 328 | 697 | 673 | 636 | |
Annual Total | 2,335 | 1,710 | 1,335 | 2,337 | 2,654 | 2,465 | 500 |
Total CFO Turnover Comparisons
Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
1st Quarter | 593 | 332 | 296 | 280 | 640 | 495 | 468 |
2nd Quarter | 551 | 326 | 273 | 404 | 612 | 557 | |
3rd Quarter | 438 | 279 | 256 | 629 | 598 | 582 | |
4th Quarter | 364 | 313 | 258 | 476 | 569 | 562 | |
Annual Total | 1,946 | 1,250 | 1,083 | 1,789 | 2,419 | 2196 | 468 |
Total C-level Turnover Comparisons
Year | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
1st Quarter | 6735 | 4061 | 3453 | 2863 | 5442 | 3971 | 4083 |
2nd Quarter | 7430 | 5051 | 3199 | 4041 | 5036 | 4102 | |
3rd Quarter | 4865 | 3690 | 2522 | 5349 | 4235 | 4123 | |
4th Quarter | 4277 | 3439 | 2381 | 4596 | 4197 | 4196 | |
Annual Total | 23,307 | 16,241 | 11,555 | 16,849 | 18,910 | 16,392 | 4,083 |
As you can see from the quarterly and annual executive turnover totals in the above chart, North American public companies are operating at a more consistent level with regard to turnover. The same is true when viewed from a brief monthly perspective. March 2014's executive turnover totals remained reasonably high in the key categories. Liberum anticipates this trend will continue as we move through the Spring and Summer months.
The latest monthly comparison figures with regard to executive turnover for March 2014 with those of March 2013 and February 2014 and March 2014 are as follows:
- CEO turnover for March 2014 declined 7% from that of March 2013, whereas CFO, C-level and Board of Director turnover all increased 22%, 9% and 9%, respectively.
- The the month to month change from February 2014 to March 2014 showed a small decline of 2% for CEOs, an increase of 13% for CFOs and an increase of 6% with regard to C-level changes and an increase of 16% for Board of Director changes. Overall these totals remain positive signs for the economy.
In the below report, Liberum has focused on fifty seven CEO changes of special significance for the month of March out of a total of only 164. We have also put together the overall turnover figures for the month of March 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
03-03 I.DOBB. Systems, Inc. IDSY NASDAQ 69
03-03 meemee Media Inc. MEME OTN 16
03-03 Vansen Pharma Inc. VNSN 112
03-03 Xylem Inc. Common XYL NYSE
03-04 Oiltanking Partne OILT NYSE 2893
03-04 QUALCOMM Incorporated QCOM NASDAQ 129900
03-05 Comscore, Inc. SCOR NASDAQ 1074
03-05 Stallergenes GENP FRANCE EPA
03-05 Viking Minerals I VKML OTN
03-05 Wyndham Worldwide WYN NYSE
03-06 Vedanta Resources VED.L 23
03-07 Canexus Corp CXUSF OTN 659
03-07 Plandel Resources PLDX 56
03-10 Astika Holdings ASKH OBB 8
03-10 Kresta Fpo KRS ASX 25
03-11 Synacor, Inc. SYNC NASDAQ 74
03-11 The Bon-Ton Stores, Inc. BONT NASDAQ 207
03-12 Advanced Content ADCS OTN
03-12 Akers Biosciences AKER NASDAQ 11
03-12 Covisint Corporation COVS NASDAQ 292
03-12 Eastman Kodak Company EK
03-12 Semgroup Corporat SEMG NYSE 2767
03-13 Apple Rush Co APRU OTN 5
03-13 Rotoblock Corp RTBC OTN 415
03-14 Business Cont Sol BUCS OTN 4
03-14 Centor Inc CNTO OTN 8
03-14 Chembio Diagnosti CEMI NASDAQ 32
03-14 Crumbs Bake Shop CRMB NASDAQ 8
03-14 Nokia Corporation (ADR) NOK NYSE 28214
03-14 SupportSoft, Inc. SPRT NASDAQ 151
03-14 Us Dataworks Inc UDWK OTN 2
03-17 Digital Realty Trust, Inc. DLR NYSE 6665
03-17 First Titan Corp FTTN OBB 5
03-17 Wayne Savings Bancshares, Inc WAYN NASDAQ 33
03-18 Nam Tai Electronics, Inc. NTE NYSE 271
03-18 Schmolz + Bicken SSN Germany
03-18 United Community Financial Corp UCFC NASDAQ 197
03-19 Equity One, Inc. EQY NYSE 2637
03-20 Contravir Pharmac CTRV OBB 52
03-20 General Cable Corporation BGC NYSE 1376
03-20 Symantec Corporation SYMC NASDAQ 12923
03-20 Synta Pharmaceuticals Corp. SNTA NASDAQ 393
03-21 3d Eye Solutions, TDEY OTN 42
03-21 Pbs Holding, Inc. PBHG OTN 409
03-21 Zumiez Inc. ZUMZ NASDAQ 738
03-24 Catalyst Copper C CCY CANADA 836
03-25 Affiliated Managers Group, Inc. AMG NYSE 9873
03-25 Cantex Energycorp CTXE OTN 344
03-25 Double Eagle Petroleum Co. DBLE 32
03-25 Gordmans Stores GMAN NASDAQ 101
03-25 Omnicare, Inc. OCR NYSE 5859
03-27 Superior Industries Int'l Inc. SUP NYSE 546
03-27 Westmoreland Coal Company WLB NASDAQ 433
03-28 Hudson Valley Hol HVB NYSE 377
03-31 CDI Corp. CDI NYSE 334
03-31 Elbit Medical Imaging Ltd EMITF NASDAQ 6
03-31 Zoned Properties ZDPY OTN 10
MARCH 2014 MANAGEMENT CHANGE STATISTICS
C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1355
TOP INDUSTRY SECTORS
> Drugs/Biotech - 144
> Banking - 103
> Energy - 87
GRAND TOTAL - 1355
TOP INDUSTRY SECTORS
> Drugs/Biotech - 144
> Banking - 103
> Energy - 87
MARCH 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 164
TOP INDUSTRY SECTORS
> Banking - 15
> Drugs/Biotech - 15
> Metals/Mining - 14
GRAND TOTAL - 164
TOP INDUSTRY SECTORS
> Banking - 15
> Drugs/Biotech - 15
> Metals/Mining - 14
MARCH 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 166
TOP INDUSTRY SECTORS
> Drugs/Biotech - 17
> Metals/Mining - 14
> Banking - 12
GRAND TOTAL - 166
TOP INDUSTRY SECTORS
> Drugs/Biotech - 17
> Metals/Mining - 14
> Banking - 12
MARCH 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 497
TOP INDUSTRY SECTORS
> Drugs/Biotech - 72
> Energy - 38
> Banking - 32
GRAND TOTAL - 497
TOP INDUSTRY SECTORS
> Drugs/Biotech - 72
> Energy - 38
> Banking - 32
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.