Management Turnover as Change Agent

Thursday, January 14, 2016

U.S. Annual and Quarterly Executive Turnover Point to Continued Economic Growth

The last year experienced significant upside in the American economy.  Employment growth continued to show steady gains throughout the entire year.  Unemployment also continued to drop throughout the year and was below estimates put forth by virtually all major analysts.  Manufacturing saw gains overall but has not been as positive a force in the economy as has overall employment growth which took place in nearly all sectors of the economy.  These positive trends have also continued in executive turnover for public companies as tracked by Liberum Research's Management Change Database.  Over the most recent number of weeks, stock markets throughout the world have been reeling and concern has been growing for the world economy and particularly the Chinese economy.  Even the United States, which has faired economically quite well in the last year to two years, has appeared to show signs of concern about the economy and the possibility of recession.  While problems remain, Liberum's latest positive monthly, quarterly, and annual executive turnover numbers continue to point to a strong American economy despite the economic difficulties the Chinese and other industrialized nations are encountering.  While the American economy is likely to encounter problems in 2016 as well, Liberum continues to remain optimistic about the economy's overall performance.  The continuing high level of executive turnover in key categories and the continuing positive trend of employment growth throughout the economy serve as a major buffer to future economic difficulties.  
Liberum has put together below, an eight year quarterly and annual 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 follow a similar pattern for 2016.

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 250,000 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 2015 for CEOs, CFOs and overall C-level turnover.  

 Total CEO Turnover Comparisons   
 Year 2008    2009 2010 2011 2012 2013 2014   2015    
1st Quarter 745491 388346 680 583 500 522 
 2nd Quarter596 380321 581665 619 527538 
 3rd Quarter533409298713 636 627 557621 
 4th Quarter461430328697 673 636651674 
 Annual Total2,3351,7101,3352,337 2,6542,465 2,2352,355 


 Total CFO Turnover Comparisons 
 Year 2008    2009 2010 2011 2012 2013 2014   2015    
1st Quarter 593 332 296 280 640 495  468513 
 2nd Quarter551 326 273 404612 557   595 588
 3rd Quarter438 279 256629 598582  550 628 
 4th Quarter364 313  258   476569562 586 624 
 Annual Total1,9461,250 1,0831,789 2,4192,196 2,1992,353 


Total C-level Turnover Comparisons
 Year 2008    2009 2010 2011 2012 2013  2014   2015    
1st Quarter 6735 4061 34532863 5442 3971 4083 3923 
 2nd Quarter7430 5051 3199 404150364102 4117 4767 
 3rd Quarter4865 3690 25225349 423541233950 5368 
 4th Quarter4277 3439  2381   4596 419741964200 5297 
 Annual Total23,307 16,241 11,55516,849 18,91016,392 16,35019,355 

Latest Monthly Comparisons

The latest monthly comparison figures with regard to executive turnover for December 2015 as compared with those of December 2014 and December 2015 and November 2015 are as follows:  
  • CEO turnover for December 2015 showed a mere 1% change from that of December 2014, CFO turnover increased only 3%, C-level turnover increased 24% and Board of Director turnover increased 21%.  
  • The the month to month change from November 2015 to December 2015 overall was somewhat less clear. CEO turnover declined 8% for CEOs, declined 15% for CFOs, but remained unchanged with regard to C-level changes and increased 13% for Board of Director changes.  
December CEO Changes of Possible Significance

In the below report, Liberum has focused on 46 CEO changes of special significance for the month of December out of a total of 229. We have also put together the overall turnover figures for the month of December 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.

12-01 Eurotin Inc  TIN Vancouver CN
12-01 Shutterfly, Inc.  SFLY  NASAQ  1580
12-01 The Travelers Companies, Inc.  TRV  NYSE  35190
12-01 Zurich Insurance  ZURN  SWL
12-02 Glorywin Entertainment Group Inc  GWIN  OTC  106
12-03 Solera Natl Banco  SLRK  OTC  16
12-04 Goldcorp Inc. (USA)  GG  NYSE  10570
12-07 FARO Technologies, Inc.  FARO  NASDAQ  514
12-07 Lantronix, Inc.  LTRX  NASDAQ  18
12-07 NRG Yield Inc  NYLD  NYSE  1160
12-07 Wellgreen Platinum Ltd  WGPLF  OTC  20
12-08 Afrocentric Investment  ACT JSE South Africa
12-08 Benitec Biopharma Ltd  BNTC  NASDAQ  27
12-08 Myers Industries, Inc.  MYE  NYSE  438
12-09 Novogen Limited (ADR)  NVGN  NASDAQ  36
12-10 Robert Half Intl  RHI  NYSE  6130
12-10 Veloxis Pharmaceuticals A/S  LFCYF  OTC  416
12-11 Genesis Energy, L.P.  GEL  NYSE
12-11 NEL ASA NEL.OL  2590
12-11 Sirona Dental Sys., Inc.  SIRO  NASDAQ  6030
12-11 Swiss Prime Site  SWPRF  OTC  5350
12-14 American Midstrea  AMID  NYSE  174
12-14 Cheniere Energy U  CQP  NYSE  7500
12-15 AMC Entertainment Holdings, Inc.  AMC  NYSE  2350
12-15 Platform Specialty Products Corp  PAH  NYSE  2600
12-15 Sitestar Corp  SYTE  OTC  4
12-16 Avanza Bank Holding AB  AZA  STOCKHOLM  11150
12-16 BankAtlantic Bancorp, Inc.  BBX  NYSE  247
12-16 Truecar, Inc.  TRUE  NASDAQ  693
12-17 Nanotech Entainmt  NTEK  OTC  2
12-17 Speed Commerce, I  SPDC  UTC  
12-18 Ariad Pharmaceuticals, Inc.  ARIA  NASDAQ  1170
12-18 Southcrest Fin Gr  SCSG  OTC  60
12-21 Derma Sciences, I  DSCI  NASDAQ  119
12-21 Eastern Co  EML  NASDAQ  110
12-21 Kalobios Pharmace  KBIO  97
12-21 Winnebago Industries, Inc.  WGO  NYSE  524
12-22 Acacia Research- Acacia Tech  ACTG  NASDAQ  201
12-22 PDI, Inc.  PDII  9
12-23 Black Box Corporation  BBOX  NASDAQ  140
12-23 MannKind Corporation  MNKD  NASDAQ  630
12-23 Owen Dukes  SPOM  OTC  54904
12-24 True Drinks Holdings, Inc.  TRUU  OTC  19
12-28 Timberline Res Co  TLR  NYSE  2
12-28 Valeant Pharmaceuticals Int'l  VRX  NYSE  35040
12-29 Triumph Group, Inc.  TGI  NYSE  2020

> Drugs/Biotech 
- 226
> Banking  - 155
> Manufacturing - 97

> Drugs/Biotech - 24
> Banking -20
> Energy - 20
> Manufacturing - 12

> Drugs/Biotech - 29
> Manufacturing - 11
> Energy - 10
> Leisure - 10
> Media - 10
> Real Estate - 10

> Drugs/Biotech - 88
> Banking - 53
> Metals/Mining - 35
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.