May 21st, 2012
Econintersect: As published in a report from Challenger, Gray, & Christmas Inc. through the first four months of 2012 a total of 411 CEO changes were announced, a 5.3 percent increase from 390 over the same period in 2011. These CEOs resigned (118), retired (91), found positions in other companies (51), stepped down (69), ended their interim period (29), merged (14), were moved to a different position (12), were removed (9) or died (5). However, some of these Chief Executives left their companies under very unfavorable circumstances, such as, scandals (4) or bankruptcy (4). Examples of them are Jon Corzine- MF Global, Brian Dunn- Best Buy, and Scott Thompson- Yahoo.
Follow up:The Jon Corzine case hit the world in October 2011. The MF Global CEO had to resign when deficiencies in customers’ accounts were reported. An article from ABC News states, MF Global's problems are mostly related to its exposure of $6 billion to European sovereign debt, part of $41 billion in total assets, according to Janney Capital Markets. The biggest problem was not that the firm had an overly concentrated bet (nearly 15%) on the very risky asset class, although that was problematic. The biggest problem was that former the former New Jersey senator and governor allowed the company to invest with its customers' money. Even though the former CEO was trying to help the course of the company, he obviously took way too much risk, dealt with customer's funds inappropriately had to give up his chair. And he was not even maintaining the historical level of cash flow. A news story from Reuters states:
In its fiscal year ended in March, MF Global booked just $287 million of net interest income, a 60 percent decline from $731 million three years earlier.
Editor's note: All told the Corzine story appears to be one of gross incompetence. This is extremely surprising for an experienced executive who spent five years as CEO and chairman of Goldman Sachs. Maybe the problem was that he forgot that MF Global was not too big to fail.
The report from Gray & Christmas also mentioned that one of the 90 CEOs who left their company in April was Brian Dunn, CEO of Best Buy. When this story first came out, the public was told that the company needed new leadership. Nonetheless, in a publication by Forbes, the audit committee’s report showed the real reason behind his step down:
“[Dunn] violated Company policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment.”
In other words, he resigned after his relationship with a 29-year-old subordinate became public. As mentioned in an article by Bloomberg, Best Buy stock (NYSE:BBY) had tumbled 35% since June 23, 2009, the day before Dunn took over as CEO.
Scott Thompson had to give up his position as Yahoo’s CEO, after his resume was reviewed (NASDAQ:YHOO). He was in charge of the company for only four months. A controversy was created because his academic resume indicated he was a computer scientist when he actually was not. However, as published in an article by The Economic Times, Yahoo shares rose 1.7 percent after the company said on Sunday (May 13) that Thompson was leaving and Ross Levinsohn will become interim CEO.
Written by: Andrea Rangel
April 2012 CEO Turnover Report (Press Release, Challenger, Gray & Christmas, 9 May 2012)
FBI Reportedly Investigates MF Global, Jon Corzine's Future Uncertain (Susanna Kim, ABC News, 2 November 2011)
Insight: Did Corzine's risk taking cripple MF Global? (Dan Wilchins and Jed Horowitz, Reuters, 31 October 2011)
Renewed Hope that Jon Corzine, Presidnet Obama's Top Tier Campaign Bundler, Will Face Criminal Charges (Janet Tavakoli, Huffington Post, 1 May 2012)
Best Buy CEO Brian Dunn Gets $6.6 Million Severance Package After 'Friendship' With 29-Year-Old Employee (Erin Carlyle, Forbes, 14 May 2012)
Best Buy Clarifies CEO Departure as Conduct Queried (Chris Burritt, Bloomberg, 11 April 2012)
Yahoo shares up after exit of CEO Scott Thompson (Reuters, via The Economic Times, 14 May 2012)