torsdag 9 februari 2017

Difference in how companies handle a CEO leaving

woman taking a photo of mountain, difference in how companies handle a ceo leaving
During the last 12 months some Swedish companies have changed their CEO. It's normal, and it happens. One would think that companies have a plan on how to handle a situation like this but it seems a little different depending on the company. Lets look at some examples

Atlas Copco

On January 16th, 2017, Atlas Copco announced that they will split their business and moments later that their CEO Ronnie Leten will leave the company and be replaced by Mats Rahmström.
To me it seemed like the board of directors had a plan, the current CEO didn't like it and left and the board found a replacement and the announcement was made as a whole. Total time for shareholders to wonder about management of the company? 0 days.

Ericsson

On July 24th, 2016, Ericsson announced that they kicked out their CEO Hans Vestberg on the day and that  Jan Frykhammar would be interim CEO.
On October 26th, 2016, announcement was made that Börje Ekholm would be the replacement. 3 months of unease for anyone holding Ericsson.

Cloetta

24 August 2016: David Nuutinen steps down as CEO and that Danko Maras would be interim.
Danko Maras is still at writing moment the interim CEO. So where is this going?

SEB

16 Jan 2017, SEB announced that Annika Falkengren would leave the company within 6 months.
08 Feb 2017, the announcement came that Johan Torgeby would step up and replace Annika. Total time, 3 weeks and during that time the old CEO still continued to work on.

Conclusions?

Some companies are prepared and have started looking at things already before they happen as the case seems to be with SEB where rumors say that the grooming had already started a while back on Johan Torgeby. So when the announcement came that Annika Falkengren would step down, it was no big stretch to find a worthy successor.
In the case where the board wants to make drastic changes, and they prepare it and the current CEO humbly steps down as he's not committed to the plan and the board finds a replacement before the announcements begin. Cudos. Nice work.
For the companies that have it rougher, Ericsson in this example, just did not seem prepared.
And Cloetta in this case, it seems like I don't know. Is the interim CEO doing a so good job that he will be the next CEO? Or can't they really find any replacement? It leaves a lot of questions on how the management environment really is at the company. They give a really polished look outwards, but all public companies do that. I guess we will have to wait and see.

Until next time: Work to Live, Don’t Live to Work

Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.

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