Executive turnover continues in a positive direction despite a slowdown in a few of the key categories. The trend in executive turnover continues to correlate with the continuing positive news related to job growth in the American economy and the declining overall unemployment rate. Last Thursday, July 3, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) announced the June Employment Report and, as anticipated, the numbers were quite positive. According to the BLS Report,
Total nonfarm payroll employment increased by 288,000 in June, and the unemployment ratedeclined to 6.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains were widespread,led by employment growth in professional and business services, retail trade, food services and drinkingplaces, and health care.
Earlier in that same week, ADP released it latest Employment Report and the job growth numbers were also very positive. According to the ADP Report released July 2,
Private sector employment increased by 281,000 jobs from May to June.
Mark Zandi, chief economist of Moody’s Analytics, said, "The job market is steadily improving.Job gains are broad based across all industries and company sizes. Judging from the jobmarket, the economic recovery remains fully intact and is gaining momentum.”
The American economy appears to moving on all cylinders. Job opportunities are growing at numerous levels of the economy but still remain inconsistent for numerous people with different skills and experience. Top executives in both small and large firms are beginning to find new job opportunities for their talents. Liberum Research expects to see increased turnover in the executive ranks as we move through the the Summer and into the early Fall, despite the fact this is typically a slower time for executive turnover.
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. You can see that despite the slowing overall numbers in June of this year, the numbers were quite positive for the second quarter.
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 | 537 |
| 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 | 1037 |
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 | 595 |
| 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 | 1063 |
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 | 4117 |
| 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 | 8,200 |
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. June's 2014's executive turnover totals remained reasonably high in the key categories. Liberum expects this trend to continue as we move through the Summer and early Fall months.
The latest monthly comparison figures with regard to executive turnover for June 2014 with those of June 2013 and May 2014 and June 2014 are as follows:
- CEO turnover for June 2014 declined 14% from that of June 2013, whereas CFO turnover increased 10%, C-level and Board of Director turnover declined 15% for both categories.
- The the month to month change from May 2014 to June 2014 showed a decline of 23% for CEOs, a decrease of 27% for CFOs and a decline of 20% with regard to C-level changes and a decline of 12% for Board of Director changes.
In the below report, Liberum has focused on fifty six CEO changes of special significance for the month of June out of a total of only 164. We have also put together the overall turnover figures for the month of June 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
06-12 Absolute Software ABT TORONTO 301
06-24 Advanced Cell Tec ACTC OTC 193
06-02 Advanced Energy Industries, Inc. AEIS NASDAQ 756
06-17 Air Products & Chemicals, Inc. APD NYSE 27679
06-18 American Apparel, Inc. APP NYSE 115
06-10 American Int'l Group, Inc. AIG NYSE 79580
06-24 Antares Pharma Inc. ATRS NASDAQ 358
06-02 Arctic Cat, Inc. ACAT NASDAQ 452
06-05 Avra AVRN 47
06-12 bebe stores, Inc. BEBE NASDAQ 263
06-16 Biolase, Inc. BIOL NASDAQ 80
06-09 Brainstorm Cell T BCLI OTC 55
06-05 Caprock Oil Inc ROKO OTC 48
06-24 Chemring Group Pl CMGMF OTC 737
06-02 Cision CSN ST
06-26 Citrix Systems, Inc. CTXS NASDAQ 10426
06-02 Curis, Inc. CRIS NASDAQ 145
06-17 Dara Biosciences DARA NASDAQ 10
06-10 Dendreon Corporation DNDN NASDAQ 327
06-25 Diadexus, Inc. DDXS OTC 41
06-03 Digipath DIGP OTC 22
06-11 Dna Brands, Inc. DNAX OTC 696
06-27 Dollar General Corp. DG NYSE 17346
06-13 Doral Financial Corp. DRL NYSE 30
06-18 Ecrypt Techno Inc ECRY OTC 16
06-02 Equity One, Inc. EQY NYSE 2796
06-09 Everyware Global, EVRY NASDAQ 28
06-30 Finnvedenbulten FBAB STO
06-12 First Natl Corp S FXNC OTC 37
06-05 Fresh Promise Foo FPFI OTC 306
06-28 Furmanite Corp FRM NYSE 417
06-25 Heatwurx HUWX OTC 20
06-02 Hipcricket Inc HIPP OTC 32
06-23 I.D. Systems, Inc. IDSY NASDAQ 62
06-12 Infosys Technologies Ltd (ADR) INFY NYSE 30421
06-03 Innocent, Inc. INCT OTC 392
06-24 Kid Brands, Inc KIDB OTC 233
06-16 Lihua Internation LIWA OTC 62
06-05 Maxwell Resources, Inc. MAXE OTC 1
06-11 Medient Studios, MDNT OTC 1
06-02 Navidea Biopharma NAVB NYSE 239
06-13 Novatel Wireless, Inc. NVTL NASDAQ 60
06-10 Ocean Power Tech OPTT NASDAQ 20
06-18 Pdc Energy, Inc. PDCE NASDAQ 2410
06-13 Protalix BioTherapeutics Inc. PLX NYSE 356
06-30 Rayonier Inc. RYN NYSE
06-13 Research Frontier REFR NASDAQ 139
06-25 Senesco Tech SNTI OTC 19
06-17 Solvista Gold Cor SVV CA VANCOUVER 10
06-27 Tecumseh Products TECU NASDAQ 94
06-06 Thinspace Tech THNS OTC 23
06-04 Universal Truckload Srvcs, Inc. UACL NASDAQ 715
06-03 Unwired Planet, I UPIP NASDAQ 239
06-23 Vican Resources, VCAN OTC 19
06-06 Xerium Technologies, Inc. XRM NYSE 242
06-23 Zynex Inc ZYXI OTC 8
JUNE 2014 MANAGEMENT CHANGE STATISTICS
C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1206
TOP INDUSTRY SECTORS
> Drugs/Biotech - 160
> Banking - 101
> Energy - 70
GRAND TOTAL - 1206
TOP INDUSTRY SECTORS
> Drugs/Biotech - 160
> Banking - 101
> Energy - 70
JUNE 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 163
TOP INDUSTRY SECTORS
> Drugs - 24
> Auto - 7
> Energy - 6
GRAND TOTAL - 163
TOP INDUSTRY SECTORS
> Drugs - 24
> Auto - 7
> Energy - 6
JUNE 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 181
TOP INDUSTRY SECTORS
> Drugs/Biotech - 26
> Metals/Mining - 14
> Health - 10
GRAND TOTAL - 181
TOP INDUSTRY SECTORS
> Drugs/Biotech - 26
> Metals/Mining - 14
> Health - 10
JUNE 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 376
TOP INDUSTRY SECTORS
> Drugs/Biotech - 60
> Banking - 26
> Energy- 25
GRAND TOTAL - 376
TOP INDUSTRY SECTORS
> Drugs/Biotech - 60
> Banking - 26
> Energy- 25
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. Subscribers often take the service as an electronic feed rather than as an online service. Through the use of Liberum's electronic feed, investment firms have the ability to integrate Liberum's management change data with a variety of other feeds and data applications which when combined could be used as a sophisticated method for developing potential short and long-term investment ideas.
