March Executive Turnover Defies Weakened Employment Numbers

Last Friday, April 3, the U.S. Government released its job growth and employment numbers for March, and to most analysts' surprise, the totals were quite weak and well below most analysts' expectations.  Liberum Research, which tracks executive turnover in public companies saw the situation a bit differently.  Liberum's North American executive turnover numbers were much better than the U.S. government job growth and and unemployment numbers for March.  While Liberum's March figures were far from terrific, they continued to point in a positive direction for the North American economy particularly the United States economy.  Many experts are now atttributing the government's weak March numbers to the continuing harsh winter.  On Monday April 6, the Los Angeles Times quoted the President of the New York Fed, William C. Dudley when referring to the job numbers as folllows,

"The March labor market report is another indicator that the first quarter is likely to be quite weak," Dudley said in the first comments from a Fed policymaker on the employment data released Friday.

Dudley said the report showed a broad-based slowdown in job creation last month. He added that "it will be important to monitor developments to determine whether the softness in the March labor market report .... foreshadows a more substantial slowing in the labor market than I currently anticipate."  The recent "downside surprises" in key economic data reflect "temporary factors to a significant degree."

His staff found that the effects of snow and winter weather in the Northeast and Midwest were 20% to 25% more severe than the five-year average.

Time will tell but Liberum Research contends Dudley's assessment is correct.  Over the last number of months, Liberum Research has seen a slowdown in executive turnover but as of this point, the slowdown has not been worrisome.  Liberum expects the spring and summer months will show far more improvement in executive turnover totals, and if that happens it will bode well for the North American economy.  

Liberum has put together below, a seven 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, while not consistently, and that trend has continued and Liberum expects it to be about the same for the remainder 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 richard@twst.com 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.

 

Quarterly and Annual Executive Turnover Totals

Below is a simple table outlining the quarterly and annual turnover totals as registered through Liberum Research's Management Change Database for 2008 through the first quarter of 2015 for CEOs, CFOs, and overall C-level turnover.  

 Total CEO Turnover Comparisons   

Year	2008	2009	2010	2011	2012	2013	2014	2015
1st Quarter	745	491	388	346	680	583	500	522
2nd Quarter	596	380	321	581	665	619	527
3rd Quarter	533	409	298	713	636	627	557
4th Quarter	461	430	328	697	673	636	651
Annual Total	2,335	1,710	1,335	2,337	2,654	2,465	2,235	522

 

 

 Total CFO Turnover Comparisons 

Year	2008	2009	2010	2011	2012	2013	2014	2015
1st Quarter	593	332	296	280	640	495	468	513
2nd Quarter	551	326	273	404	612	557	595
3rd Quarter	438	279	256	629	598	582	550
4th Quarter	364	313	258	476	569	562	586
Annual Total	1,946	1,250	1,083	1,789	2,419	2,196	2,199	513

 

 

 Total C-level Turnover Comparisons

Year	2008	2009	2010	2011	2012	2013	2014	2015
1st Quarter	6735	4061	3453	2863	5442	3971	4083	3923
2nd Quarter	7430	5051	3199	4041	5036	4102	4117
3rd Quarter	4865	3690	2522	5349	4235	4123	3950
4th Quarter	4277	3439	2381	4596	4197	4196	4200
Annual Total	23,307	16,241	11,555	16,849	18,910	16,392	16,350	3,923

 

The latest monthly comparison figures with regard to executive turnover for March 2015 as compared with those of March 2014 and March 2015 and February 2015 are as follows:  

• CEO turnover for March 2015 showed a 10% increase over that of March 2014, CFO turnover increased 2%, C-level turnover declined 8% and Board of Director turnover declined 23%.  

• The the month to month change from February 2015 to March 2015 overall was somewhat more positive. CEO turnover increased 20% for CEOs, increased a huge 43% for CFOs, increased 5% with regard to C-level changes but declined 8% for Board of Director changes.  

In the below report, Liberum has focused on 32 CEO changes of special significance for the month of March out of a total of 180. We have also put together the overall turnover figures for the month of March 2015.  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.

DATE       COMPANY   TICKER    EXCHANGE   MARKET CAP $ MILLIONS

03-02 Api Technologies  ATNY  NASDAQ  114

03-05 Centrus Energy Co LEU NYSE 38

03-09 Credit Suisse Group (ADR)  CS  NYSE  39780

03-10 American Realty C ARCP  NASDAQ  8930

03-10 Epcylon Technolog PRFC  OTC

03-10 Tag Oil Ltd  TAOIF  OTC  67

03-11 ACADIA Pharmaceuticals Inc.  ACAD  NASDAQ  3340

03-11 Prudential Financial, Inc.  PRU  NYSE  37380

03-11 Sanchez Production Partners LP  SPP  NYSE  54

03-13 Blue Square-Israel Ltd. (ADR) BSI  NYSE  185

03-16 Madison Square Ga   MSG  NASDAQ  6110

03-16 Sotheby's   BID  NYSE  2830

03-16 Stoneridge, Inc.  SRI  NYSE  319

03-16 Visteon Corporation  VC  NYSE  4280

03-17 Agritek Holdings  AGTK  OTC

03-17 Charles & Colvard, Ltd.  CTHR  NASDAQ  25

03-17 Corinthian Colleges, Inc.  COCO  OTC

03-18 Medical Marijuana  MJNA  OTC  60

03-18 TreeHouse Foods Inc.  THS  NYSE  3650

03-19 Acelrx Pharmaceut  ACRX  NASDAQ  178

03-19 Seaworld Entertai  SEAS  NYSE  1720

03-20 Cockatoo Coal Ltd  CKATF  OTC  1680

03-20 On4 Communication  ONCI  OTC  59502

03-23 Halfords Group Adr  HLFDY  OTC  1280

03-23 Neutral Tandem, I  IQNT  NASDAQ  544

03-24 Midstates Petrole  MPO  NYSE  62

03-24 Rocket Fuel Inc.  FUEL  NASDA  395

03-25 Blonder Tongue Labs, Inc.  BDR  NYSE  11

03-26 Align Technology, Inc.  ALGN  NASDAQ  4400

03-26 Sagent Pharmaceut  SGNT  NASDAQ  768

03-30 State Auto Financial   STFC  NASDAQ  997

03-31 Gen Employment En  JOB  NYSE  27

MARCH 2015 MANAGEMENT CHANGE STATISTICS

C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1250
TOP INDUSTRY SECTORS
> Drugs/Biotech - 125
> Banking  -78
> Business Services - 71

MARCH 2015 CEO CHANGE STATISTICS
GRAND TOTAL - 180
TOP INDUSTRY SECTORS
> Drugs/Biotech - 20> Business Services -13
> Energy - 12

MARCH 2015 CFO CHANGE STATISTICS
GRAND TOTAL - 170
TOP INDUSTRY SECTORS
> Drugs/Biotech - 12
> Food - 10
> Health Services - 10

MARCH 2015 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 381
TOP INDUSTRY SECTORS
> Drugs/Biotech - 45
> Energy - 24
> Banking - 23
> Health Services - 23

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.