2nd Quarter Executive Turnover Remains Positive - Investment Ops Abound

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 rate 

declined 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 drinking 

places, 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 job 

market, 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

JUNE 2014 CEO CHANGE STATISTICS
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

JUNE 2014 BOARD OF DIRECTOR CHANGE STATISTICS
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.