Management Turnover as Change Agent

Thursday, May 7, 2015

April a Mixed Month for Executive Turnover and Employment Growth

April was somewhat of a mixed month in relation to executive turnover as tracked by Liberum Research.  A number of key categories (All C-level, CEO, CFO and board of director changes) we focus on saw increases while others were just the opposite.  Overall executive turnover in the month of April was a bit more robust than the last few months but far from very positive in terms of total numbers.  Liberum's executive turnover numbers dovetailed closely with ADP's April Employment Report released earlier this week whose numbers were below most analysts' expectations.  Liberum Resarch views the level of executive turnover as a key economic indicator for the ecoonomy.  It appears from Liberum and ADP's latest numbers for April, the American economy is struggling to find its legs once again.  At the end of this week, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) will release its much anticipated April Employment Report.  Liberum expects the BLS report will come in closer to analysts' expectations than the ADP Report and will be slightly more positive.  

Overall Liberum Research remains positive about the North American economies, particularly the United States.  We expect the spring and early summer months will see the economy jump back a bit but will remain in flux. Excecutive turnover numbers are expected to grow as will overall employment.


Private sector employment increased by 169,000 jobs from March to April.

Payrolls for businesses with 49 or fewer employees increased by 94,000 jobs in April, down from 105,000in March. Employment among companies with 50-499 employees increased by 70,000 jobs, up from 64,000 the previous month. Employment gains at large companies – those with 500 or more employees – decreased slightly from March, adding 5,000 jobs in April, down from 6,000. Companies with 500-999 employees added no jobs, after adding just 2,000 in March. Companies with over 1,000 employees added 5,000 jobs, a small improvement from 4,000 the previous month.

"April job gains came in under 200,000 for the second straight month,” said Carlos Rodriguez, president and chief executive officer of ADP. “Companies with 500 or more employees had the slowest growth.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Fallout from the collapse of oil prices and the surging value of the dollar are weighing on job creation. Employment in the energy sector and manufacturing is declining. However, this should prove temporary and job growth will reaccelerate this summer.”
 

Liberum Comparison Breakdown of Key April Executive Turnover Figures

Below is a breakdown of Liberum's key executive category percentage changes for April 2015 compared with April a year earlier and the previous month of March 2015.   For the first time in a few years we saw declines in all four key categories measured. 
 
April 2014 Compared to April 2015
  • For April 2015 declines in turnover occured in three of the four key categories.  CEO changes increased 7% from April a year earlier whereas CFO changes declined 4%, C-level changes declined 9%, and board of director changes declined 12%.  
March 2015 Compared to April 2015
  • The month to month changes in executive turnover was bit more mixed. CEO changes declined 9%, CFO changes declined 5%, whereas C-level changes increased 2% and board of director changes increased 14%.      
Below are the overall turnover totals for April 2015.  The information is just illustrative of how institutional investors could view executive turnover and its possible relationship with a company's performance.  Using Liberum's database could offer a totally new perspective on investment and is a potential way to come up with unique special situation opportunities.  Executive search firms on the other hand, can use the information to generate new leads and new clients and consulting firms can use the data for a variety of purposes.   

Call now (212-988-5497) or email richard@twst.com and get a no obligation one week trial to Liberum's online management change database. Find out why Hedge Funds, Executive Search, Business Intelligence and Consulting firms all rely on Liberum's data.
 
KEY CEO CHANGES - APRIL 2015
39 COMPANIES WITH CEO CHANGES WORTH RE-EXAMINING
 
According to Liberum's Management Change Database, a total of 163 CEO related changes occurred during April 2015. Here are 39 from the time period that caught my eye.  By significant, I'm looking for situations where I think a particularly strong or weak choice has been made - given the apparent current state of the company - or where there is an interesting special situation. (Anyone using Liberum's database could do the same kind of analysis for other key titles, e.g., CFOs, COOs, CMOs, CIOs, Presidents, etc.)

DATE  COMPANY TICKER  EXCHANGE  MARKET CAP $ MILLIONS    
04-01 Shanta Gold  SHG LONDON
04-02 Fortum Corp Finland  FOJCF  OTC
04-02 Four Oaks Fincorp  FOFN  OTC
04-02 Mattel, Inc.  MAT  NASDAQ  7660
04-02 Sotheby's  BID  NYSE  2890
04-06 Cash America International, Inc.  CSH  NYSE  684
04-06 Wesco Aircraft Ho  WAIR  NYSE  1520
04-07 Interleukin Genet  ILIU  OTC
04-08 Cocrystal Pharma  COCP  OTC
04-08 Gold Reach Resour  GRV VANCOUVER  13
04-08 Zynga Inc.  ZNGA  NASDAQ  2280
04-13 Ces Synergies Inc  CESX  OTC
04-13 Eagle Ford Oil & Gas  ECCE  OTC
04-13 Unwired Planet, I  UPIP  NASDAQ
04-14 Avita Medical  AVMXY  OTC
04-15 Abercrombie & Fitch Co.  ANF  NYSE
04-15 Angie's List, Inc  ANGI  NASDAQ
04-15 West Pharmaceutical Services Inc.  WST  NYSE
04-16 Harvard Apparatus  HART  NASDAQ 34
04-16 Sunedison, Inc. C  SUNE  NYSE  7310
04-16 Volga Gas  VGAS  LONDON
04-17 A.M. Castle & Co.  CAS  NYSE  98
04-20 Chuma Holdings In  CHUM  OTC
04-20 Coty Inc. Class A  COTY  NYSE  8670
04-20 Netqin Mobile Inc  NQ  NYSE  372
04-20 Voya Financial, Inc.  VOYA  NYSE  10420
04-21 Amazing Energy Oil & Gas  AMAZD  NQB  31
04-21 Rolls Royce Grp Adr  RYCEY  OTC
04-22 Balchem Cp  BCPC  NASDAQ  1710
04-22 Manitou Gold Inc  MNTUF  OTC  2
04-22 Prestige Brands Holdings, Inc.  PBH  NYSE  2240
04-22 Transocean Inc.   RIG  NYSE  5960
04-22 Volvo Ab Cl B Adr  VOLVY  OTC
04-24 Houston American  HUSA  NYSE  11
04-24 Laserlock Techs   LLTI  OTC
04-24 Wherevertv Broadcast  TVTV  OTC
04-27 Campus Crest Comm  CCG  NYSE  420
04-27 Fuel Systems Solutions, Inc.  FSYS  NASDAQ  216
04-27 Zogenix, Inc.  ZGNX  NASDAQ  210
 
APRIL 2015 MANAGEMENT CHANGE STATISTICS
C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1270
TOP INDUSTRY SECTORS
> Drugs/Biotech - 136> Banking - 96
> Energy - 75



APRIL 2015 CEO CHANGE STATISTICS
GRAND TOTAL - 163
TOP INDUSTRY SECTORS
> Banking - 16
> Energy - 16> Drugs/Biotech - 14
> Manufacturing - 11

















APRIL 2015 CFO CHANGE STATISTICS
GRAND TOTAL - 161
TOP INDUSTRY SECTORS
> Drugs/Biotech - 22
> Business Services - 11
> Health Services - 10
> Manufacturing - 10

















APRIL 2015 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 435
TOP INDUSTRY SECTORS
> Drugs/Biotech - 56
> Energy - 34
> Banking - 31


















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, 
  • corporate titles
  • 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.