May Executive Turnover Points Positive For Economy - Watch for Bumps Ahead

Liberum Research's executive turnover data for May 2014 continued to show positive signs for the North American economies.  CEO and CFO changes monitored by Liberum saw very high percentage increases from the previous month of April and C-level turnover showed a healthy increase over the same period.  The numbers were not quite as positive when viewed from the same month of May a year earlier, but Liberum does not view the year to year by the one month as a real issue.  The recovery continues to move in spurts, both up and down, but the overall trend remains positive.  Wednesday, June 4, ADP released its Employment Report for May and while the totals were below most analysts expectations, the U.S. Labor Department's Bureau of Labor Statistics (BLS) Employment Report, the far more important of the two, released Friday, June 6, was better than the ADP report and bodes well for the continued up and down recovery.  This BLS report was far closer to results Liberum saw in May as it related to executive turnover.  

Last Wednesday's ADP's Employment Report for May 2014, as stated above, was below analysts expectations but was not terrible.  According to the ADP Employment Report:

"After a strong post-winter rebound in April, job growth in May slowed somewhat,” said Carlos Rodriguez, president and chief executive officer of ADP. “The 179,000 jobs added figure is higher than May of last year and in line with the average over the past twelve months.” 

Mark Zandi, chief economist of Moody’s Analytics, said, "Job growth moderated in May. The slowing in growth was concentrated in Professional/Business Services and companies with 50-999 employees. The job market has yet to break out from the pace of growth that has prevailed over the last three years.” 

Last Friday's U.S. Labor Department's BLS Report, while not terrific, was reaosnably good:

Total nonfarm payroll employment rose by 217,000 in May, and the unemployment rate was unchanged at 6.3 percent. Employment increased in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing.

Liberum Comparison Breakdown of Key May Executive Turnover 

Below is a breakdown of Liberum's key executive category percentage changes for May 2014 compared with May a year earlier and the previous month of April 2014.   

• For May 2014 decreases took place in two key categories.  CEO changes declined 5% from a year earlier, board of director changes declined 21%,  whereas overall C-level (as defined by Liberum Research as board of directors, CEOs, CFOs down to corporate VPs) remained virtually the same and CFO changes increased 17%.

• The month to month change in executive turnover (April 2014 to May 2014) showed a different picture with increases in three of the four key categories of 38% for CEOs, CFO changes increased a whopping 48%, C-level changes increased 8% while board of director changes declined 14%.       

Below are the overall turnover totals for May.  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.  

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.

KEY CEO CHANGES - MAY 2014
58 COMPANIES WITH CEO CHANGES WORTH RE-EXAMINING 

According to Liberum's Management Change Database, a total of 211 CEO related changes occurred during May 2014. Here are 58 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. 

COMPANY TICKER  EXCHANGE  MARKET CAP $ MILLIONS    

Adcare Health Sys  ADK  NYSE

Aggreko  AGK   LONDON  45

Ambassadors Group  EPAX  NASDAQ  60

Ambit Biosciences  AMBI  NASDAQB  110

American Caresour  ANCI  NASDAQ  11

Assurant, Inc.  AIZ  NYSE  4793

California Gold M  CGM  CVE

Canadian Pacific Railway LTD (USA)  CP  NYSE   27698

Canamex Resources  CSQ  CVE

Corecomm Solution  COCMF  OBB  649

Covance Inc.  CVD  NYSE  4826

Crocs, Inc.  CROX  NASDAQ  1308  

ENSCO International Inc  ESV  NYSE  11837

Enzymebiosystems  ENZB  OBB  19

Excel Corp   EXCC  OTN  9

Famous Dave's of America, Inc. DAVE  NASDAQ  227

Ford Motor Company F  NYSE  61662

FTI Consulting, Inc. FCN  NYSE  1236

Furmanite Corp FRM  NYSE  412

Green Tech Soluti  GTSO  OBB  986

Greenplex Svcs In  GRPX    OTN  43

Hansen Medical, I  HNSN  NASDAQ  147

Hawaiian Electric Industries, Inc. HE  NYSE   2436

Hyduke Energy Ser  HYD  TORONTO  13

Infoblox Inc. Com  BLOX  NYSE  690

International Flavors & Fragrances Inc.  IFF   NYSE  7982

Ja Energy JAEN  OBB  9

Krispy Kreme Doughnuts  KKD  NYSE  1210

LGL Group Inc. LGL  NYSE  11

Lihua Internation  LIWA  NASDAQ  62

Magnachip Semicon  MX  NYSE  439

Marin Software In  MRIN  NYSE  324

Maxwell Technologies Inc.  MXWL  NASDAQ  483

National Bank Hol  NBHC  NYSE  844

Navidea Biopharma  NAVB  NYSE  204

Nokian Tyres  NRE  FINLAND

Omnicare, Inc.  OCR  NYSE  6271

Orofino Gold Corp  ORFG  OTN  2

OXiGENE, Inc. OXGN  NASDAQ  27

Parker Drilling Company  PKD  NYSE  803

PGT, Inc. PGTI  NASDAQ  395

PolyOne Corporation POL  NYSE  3533

Pope Resources POPE  NASDAQ  304

Prospect Global R  PGRX  OTN  4

Radient Pharm Cp  RXPC  OTN

Sally Beauty Holdings, Inc.  SBH  NYSE  4135

Sierra Monitor Co  SRMC  OTN  16

SupportSoft, Inc.  SPRT  NASDAQ  124

Target Corporation  TGT  NYSE  36939

The Mosaic Company  MOS  NYSE  19133

Tier Technologies, Inc.  TIER  OTN  711

Vhgi Holdings Inc  VHGI  OTN  891

Viewtran Group, I  VIEW  NASDAQ  58

Virtus Oil and Ga  VOIL  OBB

Vulcan Materials Co  VMC  NYSE  7815

WesBanco, Inc. WSBC  NASDAQ  847

Wpx Energy, Inc.  WPX  NYSE  4345

Yaterra Ventures YTRV  OTN  635

MAY 2014 MANAGEMENT CHANGE STATISTICS

C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1513

TOP INDUSTRY SECTORS

> Drugs/Biotech - 137> Business Services - 102
> Banking - 98

MAY 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 211

TOP INDUSTRY SECTORS

> Energy - 19> Drugs - 17
> Health Services - 11

MAY 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 247

TOP INDUSTRY SECTORS

> Business Services - 23
> Drugs/Biotech - 20
> Energy - 18

MAY 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 428

TOP INDUSTRY SECTORS

> Drugs/Biotech - 39
> Energy - 30
> Business Services - 29

April Turnover Declines a Bit But Future Remains Rosy

Liberum's executive turnover data for April 2014 seemed to conflict a bit with the latest employment growth and unemployment figures that were recently announced for April 2014.  CEO and CFO changes monitored by Liberum Research saw reasonably high percentage declines from the same month a year earlier.  The numbers were a bit better for those two categories, when compared with the previous month's total for March 2014.  The trend was a somewhat more positive when we examined the same changes with regard to overall C-level turnover (as defined by Liberum as all C-level executives down to VP level) and Board of Director changes.  C-level turnover increased a mere 2% from the year earlier period of April 2013 and  saw a slight increase of 3% when compared with the previous month of March 2014.  Board of Director turnover was slightly different with a 7% increase from the year earlier and a static change for the previous month of March 2014.  Overall, Liberum was not very concerned with the slight declines recorded for April 2014.  We still see positive changes continuing in executive turnover totals and expect them to remain the same or higher as we move forward in to the spring and summer.  Investors should keep this in mind.

Last week both ADP's Employment Report for April 2014 and the government's monthly report from the Bureau of Labor Statistics (BLS) illustrated truly positive news for employment growth and unemployment.  While a significant part of the large employment increases and declines in unemployed were due to end of the difficult winter, Liberum still views the overall numbers as being quite positive.   According to the ADP Employment Report:

Private-sector employment increased by 220,000 from March to April, on a seasonally adjusted basis. 

The government's BLS Report was even more positive:

Total nonfarm payroll employment rose by 288,000, and the unemployment rate fell by 0.4 percentage point to 6.3 percent in April, the U.S. Bureau of Labor Statistics reported. Employment gains were widespread, led by job growth in professional and business services, retail trade, food services and drinking places, and construction.

Below is a breakdown of Liberum's key executive category percentage changes for April 2014 compared with April a year earlier and the previous month of March 2014.   

• For April 2014 declines took place in two key categories.  CEO changes declined 32% from a year earlier, CFO changes declined 12%,  overall C-level (as defined by Liberum Research as board of directors, CEOs, CFOs down to corporate VPs) changes increased 2% and board of director changes increased 7%.

• The month to month change in executive turnover (March 2014 to February 2014) showed a slightly different picture with a decline of 7%  for CEOs, CFO changes increased a mere 1%, C-level changes increased 3% and board of director changes remained static.       

Below are the overall turnover totals for April.  

 

KEY CEO CHANGES - APRIL 2014
53 COMPANIES WITH CEO CHANGES WORTH RE-EXAMINING 

According to Liberum's Management Change Database, a total of 153 CEO related changes occurred during April 2014. Here are 53 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. 

DATE   COMPANY TICKER  EXCHANGE  MARKET CAP $ MILLIONS    

04-01 Core Resource Man CRMI  OTN  47

04-01 Sun Bancorp, Inc.  SNBCNASDAQ  337

04-02 Epcylon Technolog PRFC  OTN  26

04-02 Reachlocal, Inc. RLOC  NASDAQ  302

04-03 Modern Mobility A MDRM  OTN  34

04-03 Taylor Consulting TAYO  OBB  17

04-03 Vapor Hub Interna VHUB  OTN

04-04 GTx, Inc.   GTXI  NASDAQ  116

04-07 Efftec Intl Inc EFFI  OTN  381

04-07 Equity One, Inc. EQY  NYSE  2663

04-07 Patriot Berry Far PBFI  OBB  47

04-07 Plures Technologi MANY  OTN  170

04-07 Rango Energy, Inc RAGO  OTN  10

04-07 Vonage Holdings Corp.  VG  NYSE  880

04-08 Harsco Corporation HSC  NYSE  1852

04-08 L&L Energy, Inc. LLEN  OTN  54

04-09 Attune Rtd AURT  OTN  520

04-09 Chimerix, Inc. CMRX  NASDAQ  591

04-09 Tierra Grande Res TGRI  OTN  1

04-10 Cal-Bay Intl Inc CBYI  OTN  777

04-10 Infosys Technologies LTD (ADR)  INFY  NYSE

04-11 CMG Holdings Group, Inc.  CMGO  OTN  6

04-11 Crossbox Inc. CBXX  23

04-14 Sw China Imports SWCI  OBB

04-14 Thermoenergy Corp TMEN  OTN  2

04-14 Uni-Pixel, Inc. UNXL  NASDAQ  93

04-15 As Seen On Tv Inc ASTV  OBB  4

04-15 Finmeccanica Adr FINMY  OTN  5111

04-15 Integrated Drilli IRIG  OTN  27

04-15 Noble Energy, Inc. NBL  NYSE  25920

04-16 Glow Holdings, In GLOH  OTN

04-16 Higher One Holdin ONE  NYSE  288

04-17 Agricon Global Co AGRC  OTN  4

04-17 Impax Laboratories Inc.  IPXL  NASDAQ  1733

04-18 Ford Motor Company F  NYSE  64363

04-18 Telecom Italia Sp TIAJF  OTN

04-22 Ashland Inc. ASH  NYSE  7600

04-22 Health Rev Assurn HRAA  OBB  5

04-22 Helios Advantage HAV  NYSE

04-22 Independence Res SNKTY  OTN  17

04-22 Reneuron Group Pl RNUGF  OTN  58

04-22 Strategic Mng Cor SMNG  OTN

04-23 Accretive Health ACHI  OTN  882

04-23 Capital Product P CPLP  NASDAQ  946

04-23 Digi International Inc.  DGII  NASDAQ  228

04-23 Newcrest Mining L NCMGF  OTN  7430

04-23 Vermillion Inc VRML  NASDAQ  108

04-24 Canadian Imperial CM  NYSE  34609

04-24 WesBanco, Inc. WSBC  NASDAQ  878

04-25 Bg Group BG  LONDON  408

04-25 Big Sky Petroleum BSP.V

04-28 Intertech Solutio ITEC  295

04-30 Superior Industries Intl Inc.  SUP  NYSE  565

 

APRIL 2014 MANAGEMENT CHANGE STATISTICS

C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1398

TOP INDUSTRY SECTORS

> Drugs/Biotech - 150> Banking - 120
> Energy - 87

APRIL 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 153

TOP INDUSTRY SECTORS

> Energy - 16> Drugs - 15
> Banking - 12

APRIL 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 167

TOP INDUSTRY SECTORS

> Drugs/Biotech - 16
> Energy - 12
> Banking - 11

> Metals Mining - 11

APRIL 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 495

TOP INDUSTRY SECTORS

> Drugs/Biotech - 47
> Chemicals - 43
> 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.  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.

If interested, 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.

Good News - Executive Turnover Begins to Grow

Executive turnover is finally beginning to show signs of growth again, a positive sign for the North American economy.  The last number of months executive turnover was rather slow in comparison to a year earlier but we are beginning to see signs of a slight growth in turnover among the executive ranks.  The increase in executive turnover seems to correlate with the latest more positive news regarding job growth in the Amercican economy.  Earlier on Friday morning April 4, the U.S. Department of Labor Bureau of Labor Statistics (BLS) announced  March employment Report and as expected the numbers were reasonably positive.  According to the BLS Report,

Total nonfarm payroll employment rose by 192,000 in March, and the unemployment rate

was unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today.

Employment grew in professional and business services, in health care, and in mining

and logging.

Earlier in the same week ADP released it latest Employment Report and the job growth numbers were greater than anticipated. According to the ADP Employment Report released April 2,

Private-sector employment increased by 191,000 from February to March, on a seasonally adjusted basis.

Highlights

•  
  • Small businesses (1-49 employees) +72,000
  • Medium businesses (50-499 employees) +52,000
  • Large businesses (500 or more employees) +67,000

 

Mark Zandi, chief economist of Moody’s Analytics, said, "The job market is coming out from its 

deep winter slumber. Job gains are consistent with the pace prior to the brutal winter. The gains 

are broad based across industries and business size classes. Even better numbers are likely in 

coming months as the weather warms.

The American economy appears to have turned the corner but is still far from out of the woods.  With winter beginning to fade the economy seems to be percolating.  Unemployment continues to slowly decline and job growth is starting to show real incremental improvement.  Top executives in both small and large firms also find themselves in a similar situation.  Opportunities are growing for top executives and at the same time underperforming firms are now more likely to change deck chairs as the overall economy shows improved signs of life.  Liberum Research expects to see increased turnover in the executive ranks as we move through the Spring and into the Summer.  

 

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.  

 

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
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	500

 

 

 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
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	468

 

 

 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
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	4,083

 

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. March 2014's executive turnover totals remained reasonably high in the key categories.  Liberum anticipates this trend will continue as we move through the Spring and Summer months.  

The latest monthly comparison figures with regard to executive turnover for March 2014 with those of March 2013 and February 2014 and March 2014 are as follows:  

• CEO turnover for March 2014 declined 7% from that of March 2013, whereas CFO, C-level and Board of Director turnover all increased 22%, 9% and 9%, respectively.  

• The the month to month change from February 2014 to March 2014 showed a small decline of 2% for CEOs, an increase of 13% for CFOs and an increase of 6% with regard to C-level changes and an increase of 16% for Board of Director changes.  Overall these totals remain positive signs for the economy.    

In the below report, Liberum has focused on fifty seven CEO changes of special significance for the month of March out of a total of only 164. We have also put together the overall turnover figures for the month of March 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

03-03 I.DOBB. Systems, Inc.  IDSY  NASDAQ  69

03-03 meemee Media Inc.  MEME  OTN  16

03-03 Vansen Pharma Inc.  VNSN  112

03-03 Xylem Inc. Common  XYL  NYSE

03-04 Oiltanking Partne  OILT  NYSE  2893

03-04 QUALCOMM Incorporated  QCOM  NASDAQ  129900

03-05 Comscore, Inc. SCOR  NASDAQ  1074  

03-05 Stallergenes  GENP  FRANCE EPA

03-05 Viking Minerals I  VKML  OTN

03-05 Wyndham Worldwide  WYN  NYSE

03-06 Vedanta Resources  VED.L  23

03-07 Canexus Corp  CXUSF  OTN  659

03-07 Plandel Resources  PLDX  56

03-10 Astika Holdings ASKH  OBB  8

03-10 Kresta Fpo  KRS  ASX  25

03-11 Synacor, Inc.  SYNC  NASDAQ  74

03-11 The Bon-Ton Stores, Inc.  BONT  NASDAQ  207

03-12 Advanced Content  ADCS  OTN

03-12 Akers Biosciences  AKER  NASDAQ  11

03-12 Covisint Corporation  COVS  NASDAQ  292

03-12 Eastman Kodak Company  EK  

03-12 Semgroup Corporat  SEMG  NYSE  2767

03-13 Apple Rush Co  APRU  OTN  5

03-13 Rotoblock Corp  RTBC  OTN  415

03-14 Business Cont Sol  BUCS  OTN  4

03-14 Centor Inc  CNTO  OTN  8

03-14 Chembio Diagnosti  CEMI  NASDAQ  32

03-14 Crumbs Bake Shop  CRMB  NASDAQ  8

03-14 Nokia Corporation (ADR)   NOK  NYSE  28214

03-14 SupportSoft, Inc.  SPRT  NASDAQ  151

03-14 Us Dataworks Inc  UDWK  OTN  2

03-17 Digital Realty Trust, Inc.  DLR  NYSE  6665

03-17 First Titan Corp  FTTN  OBB  5

03-17 Wayne Savings Bancshares, Inc  WAYN  NASDAQ  33

03-18 Nam Tai Electronics, Inc.  NTE  NYSE  271

03-18 Schmolz + Bicken  SSN  Germany

03-18 United Community Financial Corp UCFC  NASDAQ  197

03-19 Equity One, Inc.  EQY  NYSE  2637

03-20 Contravir Pharmac  CTRV  OBB  52

03-20 General Cable Corporation  BGC  NYSE  1376

03-20 Symantec Corporation  SYMC  NASDAQ  12923

03-20 Synta Pharmaceuticals Corp.  SNTA  NASDAQ  393

03-21 3d Eye Solutions,  TDEY  OTN  42

03-21 Pbs Holding, Inc.  PBHG  OTN  409

03-21 Zumiez Inc.  ZUMZ  NASDAQ  738

03-24 Catalyst Copper C  CCY  CANADA  836

03-25 Affiliated Managers Group, Inc.  AMG  NYSE  9873

03-25 Cantex Energycorp  CTXE  OTN  344

03-25 Double Eagle Petroleum Co.  DBLE  32

03-25 Gordmans Stores GMAN  NASDAQ  101

03-25 Omnicare, Inc.  OCR  NYSE  5859

03-27 Superior Industries Int'l Inc.  SUP  NYSE  546

03-27 Westmoreland Coal Company  WLB  NASDAQ  433

03-28 Hudson Valley Hol  HVB  NYSE  377

03-31 CDI Corp.  CDI  NYSE  334

03-31 Elbit Medical Imaging Ltd  EMITF  NASDAQ  6

03-31 Zoned Properties  ZDPY  OTN  10

MARCH 2014 MANAGEMENT CHANGE STATISTICS

C-LEVEL MANAGEMENT CHANGE STATISTICS
GRAND TOTAL - 1355
TOP INDUSTRY SECTORS
> Drugs/Biotech - 144
> Banking  - 103
> Energy - 87

MARCH 2014 CEO CHANGE STATISTICS
GRAND TOTAL - 164
TOP INDUSTRY SECTORS
> Banking - 15
> Drugs/Biotech  - 15
> Metals/Mining - 14

MARCH 2014 CFO CHANGE STATISTICS
GRAND TOTAL - 166
TOP INDUSTRY SECTORS
> Drugs/Biotech - 17
> Metals/Mining - 14
> Banking - 12

MARCH 2014 BOARD OF DIRECTOR CHANGE STATISTICS
GRAND TOTAL - 497
TOP INDUSTRY SECTORS
> Drugs/Biotech - 72
> Energy - 38
> Banking - 32

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.