Management Turnover as Change Agent

Tuesday, January 6, 2015

Annual and Quarterly Executive Turnover Point to Continued Economic Growth

Who would have thought, but for the first time in many years, it's the American Economy that is getting all the positive attention.  Some of the positive change is related to the precipitous fall in oil prices but more of it relates to improved ecoonomic policies and the ability of the American economy to adapt.  Liberum Research has been predicting positive news for the American Economy over the last two years.  Most of our predictions have been primarily based on the overall growth trend in executive turnover and the slowly improving employment situation. The latest executive turnover numbers, while not fabulous, continue to support positive growth for the American Economy.  The economy is still faced with serious employment problems, particularly for the long term unemployed, and a continuing drag in salary increases for the majority of the working population.  Increases in executive turnover, which Liberum Research sees as an important economic indicator, have remained on a constant positive trend.  Liberum expects executive turnover to continue in a positive direction as we move through the new year.

Liberum has put together below, a seven 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 while not consistently and that trend has continued and is expected to be about the same for all of 2015.

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 executive changes, get a free trial to Liberum's Online Management Change Database.  Just call Richard at 212-988-5497 or send an email to requesting your free trial.  Within a day of your trial, you will have access to over 200,000 data points from which you can generate ideas and daily information on who is changing jobs at the top and where they are going.
Below is a simple table outlining the quarterly and annual turnover totals as registered through Liberum Research's Management Change Database for 2008 through 2014 for CEOs, CFOs 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 636651
 Annual Total2,3351,7101,3352,337 2,6542,465 2,235

 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 586 
 Annual Total1,9461,250 1,0831,789 2,4192,196 2,199

 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 419741964200 
 Annual Total23,307 16,241 11,55516,849 18,91016,392 16,350

The latest monthly comparison figures with regard to executive turnover for December 2014 as compared with those of December 2013 and December 2014 and November 2014 are as follows:  
  • CEO turnover for December 2014 showed no change from that of December 2013, CFO turnover increased 2%, C-level turnover increased just 1% and Board of Director turnover declined 4%.  
  • The the month to month change from November 2014 to December 2014 overall was somewhat more positive. CEO turnover increased 7% for CEOs, declined 12% for CFOs, increased 10% with regard to C-level changes and increased 35% for Board of Director changes.  
In the below report, Liberum has focused on 52 CEO changes of special significance for the month of December out of a total of 226. We have also put together the overall turnover figures for the month of December 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 Liberum's Management Change Database.

12-01 Bison Instruments  BSOI  OTC  67
12-01 Idera Pharmaceuti  IDRA  NASDAQ  349
12-01 Legg Mason, Inc.  LM  NYSE  6292
12-01 Millcom Swed Dep  MICCF  8500
12-01 Pope Resources  POPE  NASDAQ  280
12-01 Pulse Electronics  PULS  OTC
12-02 Allied Minds  ALM   LONDON  7
12-02 Loews Corporation  L  NYSE  15433
12-03 Digi International Inc.  DGII  NASDAQ  185
12-04 Carbonite, Inc.  CARB  NASDAQ  383
12-04 New Jersey Mining  NJMC  NYSE  7
12-05 Arctic Cat, Inc.  ACAT  NASDAQ  430
12-05 Areva - Societe  ARVCF  OTC   4531
12-05 Bay Bancorp, Inc.  BYBK  NASDAQ  48
12-05 Francesca's Holdi  FRAN  NASDAQ  638
12-05 South Jersey Industries  SJI  NYSE  1968
12-05 Stanley Black & Decker, Inc.  SWK  NYSE  14970
12-05 Warren Resources, Inc.  WRES  NASDAQ  122
12-08 Innocoll Ag  INNL  NASDAQ  137
12-09 Abercrombie & Fitch Co.  ANF  NYSE  1961
12-10 G. Willi-Food International Limited  WILC  NASDAQ 93
12-10 Layne Christensen Company  LAYN  NASDAQ  157
12-10 Seaworld Entertai  SEAS  NYSE
12-10 Walgreen Company  WAG  70595
12-11 C T I Group   CTIG  OTC  11
12-12 Midway Gold Corpo MDW  NYSE  124
12-15 Bob Evans Farms, Inc.  BOBE  NASDAQ 1243
12-15 Crocs, Inc.  CROX  NASDAQ 1050
12-15 Lyondellbasell In  LYB  NYSE 41055
12-15 Spark Networks plc (ADR)  LOV  NYSE 86
12-16 Medbook World Inc MBOO  OTC
12-16 Sms Management  SMSUF  OTC  194
12-17 American Apparel, Inc.  APP  NYSE  128
12-17 Ampco-Pittsburgh  AP  NYSE   180
12-17 Crimson Wine  CWGL  OTC  231
12-17 Hudsons Bay  HBAYF  TORONTO  3746
12-17 New Peoples Banks  NWPP  OTC  29
12-17 Par Petroleum Corporation  PARR  NYSE 589
12-18 Avix Technologies  AVIX  OTC  719
12-18 Sierra Bancorp  BSRR  NASDAQ  240
12-19 Blue Ridge Banksh  BRBS  OTC   20
12-19 Bonanza Gold Corp BNZA  OTC  4
12-19 Huntsworth  HNT  LONDON
12-19 SupportSoft, Inc.  SPPR  NASDAQ  11
12-19 Table Trac Inc  TBTC  OTC  4
12-19 Tesco Corp  TESO  NASDAQ  539
12-22 Orca Gold  CANWF  OTC  30
12-23 Comtech Telecomm. Corp  CMTL  NASDAQ  530
12-23 Echo Therapeutics  ECTE  NASDAQ  19
12-23 Redux Holdings In  RDXH  OTC  205
12-23 Supernova Energy  SPRN  OTC  2
12-24 Takata Corp Unsp  TKTDY  OTC  922

> Drugs/Biotech 
- 148
> Energy  -119
> Banking - 97

> Energy - 14
> Drugs/Biotech - 12
> Banking -10
> Consumer Products - 10
> Metals/Mining - 10

> Drugs/Biotech - 17
> Metals/Mining - 13
> Computer - 10

> Drugs/Biotech - 68
> Energy - 49
> Banking - 33
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 over 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.  

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.