The Firer Becomes The Fired
You might think the top of the bureaucratic hierarchy is the safest place to be, but investors are reading a new study this morning that tells us a different story! Stocks are being thrown into disarray as more CEOs get fired, receiving their marching orders instead of walking away on their terms. “By mutual agreement?” Yeah right!
Even the head honcho is not immune. The boss’s boss is called the board of directors. The board, split into committees, handles all the boring stuff like pay and corporate governance, while the CEO gets his hands dirty with business matters. If the board gets fed up with the CEO, the board can call security to escort him or her out of the building! According to a new study from Exechange, a service that follows executive departures, 52% of leaders go because of pressure from above. Ruthless!
A few weeks ago, a heralded industry leader by the name of Bruce Linton got axed. As a pioneer in the emerging cannabis industry, his firing proves that no C-suite executive is safe. Remember Papa John from Papa John’s? He also got the boot recently, adding to a growing laundry list of ousted chiefs. More walking papers have been brandished to CEOs at Uber, BP, Renault-Nissan, Intel, Wynn Resorts, CBS, Disney, Xerox… you get the idea!
When a prominent official is shown the door, how investors react in the markets can be a telling indication of how important they were. Businesses often rely on one-of-a-kind executives who take great interest in how the stock is trading for their company. The very best will equip investors will all the information they need to make a buy or sell decision, and often, have insider ownership in the stock themselves. The market loves a manager with skin in the game, and stocks don’t take kindly to them being banished!
Who could be next in the firing line? It’s rough out there!