The last four years have seen continuing dramatic declines in executive turnover.  Even as the U.S. and other economies appear to be moving out of the great recession/financial crisis executive turnover has continued to decline while overall general unemployment has remained extremely high.

• For 2008 CEO turnover declined nearly 10%, CFO turnover declined 14% and overall C-level (as defined by Liberum Research as board of directors, CEOs, CFOs down to corporate VPs) turnover declined nearly 15% as compared with 2007 totals. The number totals continued to decline even more precipitously for 2009.  CEO turnover declined 27%, CFO turnover declined 36% and overall C-level turnover declined 30% as compared with 2008′s already low levels.  The numbers would be even more stark if compared with 2007.

• The executive turnover totals continued their dramatic decline throughout 2010.  Annual 2010 CEO turnover declined 22%, CFO turnover declined 13%, C-level turnover declined 29% from 2009′s totals.

Back in late September we examined for the second time the problems William Weldon, Johnson and Johnson’s JNJ (NYSE) CEO, faced after firm encountered a spate of  major over the counter drug recalls.  Johnson & Johnson under Weldon’s leadership has not done a great job in handling these problems and for that matter, continues to find itself facing new problems.  Just recently one of the firm’s subsidiaries had to recall one of the firm’s over the counter antacid products, Rolaids.  Up to this point the board has appeared to support Weldon but we finally have seen some action in this area.  Earlier this week J&J, as reported in the Wall Street Journal, announced some management changes that have increased the battle for Weldon’s succession.  According to the Journal,

J&J, New Brunswick, N.J., named Alex Gorsky, head of the medical devices & diagnostics unit, and Sheri McCoy, who heads the pharmaceutical unit, as vice chairmen of the executive committee and members of the office of the chairman, effective Jan. 3, 2011.

The race to succeed Weldon had previously appeared to be narrowed to Gorsky and McCoy in September when Colleen Goggins said she planned to step down as head of J&J’s third major unit, the consumer healthcare business. The consumer unit has been beleaguered by a series of product recalls due to quality lapses.

Johnson and Johnson must find new ways to get its house in order.  Despite good financial results the continuing recall problems could ultimately have a very adverse impact on the firm going forward.  Stay tuned as succession plans appear to be moving full steam ahead.

Jeffrey Kindler, Pfizer’s PFE (NYSE) CEO for the last four years, announced his resignation on Sunday.  The firm announced that Kindler would be replaced with longtime employee and executive, Ian C. Read.  Kindler’s weekend resignation announcement has been interpreted by many as an ouster.  Pfizer has been languishing for sometime under Kindler’s tutelage.  This has all been happening while many of the other big pharma companies have been doing quite well.  Despite a major reorganization and tremendous acquisitions (2009 acquisition of Wyeth Drugs) while in charge, Kindler, a lawyer by trade with a focus on sales, has found himself under pressure from shareholders and apparently the board.  While in charge, Kindler saw a number of research related failures with regard to potential blockbuster drugs and has been in charge as major patented drugs will see their protection expire shortly, e.g., Lipitor.According to the company’s press release Kindler was quoted on the change as follows,

My nearly nine years at Pfizer and, particularly the last four and a half as CEO, have been extremely exciting and rewarding.  I feel our team can proudly boast of some transformational accomplishments.  However, the combination of meeting the requirements of our many stakeholders around the world and the 24/7 nature of my responsibilities, has made this period extremely demanding on me personally.  Now that we are about to complete a full year of operating Pfizer and Wyeth together, with our world-class team fully in place, I have concluded the time is right to turn the leadership of the company over to Ian Read.  Ian is an outstanding and experienced pharmaceutical executive who I know will make the next phase of the company’s future a successful one.  He is more than ready to take on these responsibilities and I am excited at the opportunity to recharge my batteries, spend some rare time with my family, and prepare for the next challenge in my career.

The sudden change at Pfizer seems to make a great deal of sense.  The appointment of Read, an in-house executive with vast experience, is the right type of change for such a large company that needs to get back down to basics on all its different business fronts.  Keep a close eye on the firm as we move forward.  Read is already in charge.

InfoSpace INSP (NASDAQ), which was originally formed back in 1996, has gone through a number of transformations over the years.  Prior to the Dotcom bust, the company was a high flier, after the bust the firm came way back down to sea-level.  The company operates a number of online search services that rely on metasearch technology.  InfoSpace  primarily serves content providers and a significant portion of its business is focused on the mobile space.  Just recently, the company released its earnings for the third quarter which was disappointing and held an earnings call (Earnings Call transcript via Seeking Alpha).  Shortly after the Earnings Call its CEO, William J. Lansing stepped down after only 21 months in the position (see the 8k).  The company immediately selected William J. Ruckleshaus, a member of the firm’s board and a former CFO of AudienceScience and SVP at Expedia, to serve as the firm’s interim CEO until a successor could be found for Lansing. 

Some people have looked at Ruckleshaus’ selection as an attempt by the firm to pursue more acquisitions (see a piece by John Cook on Seattle’s Tech Flash).  I’m not quite as optimistic as Mr. Cook.  Investors should keep a close eye on the firm and the steps Ruckleshaus takes over the next few months and also who the firm ultimately chooses to take over as the new CEO.

Executive turnover has continued to decline throughout the economic and financial crisis and even as the recession ended according to the official proclamation by the National Bureau of Economic Research.  Liberum Research’s latest quarterly turnover numbers for CEOs, CFOs, Board of Directors and C-level executives (defined to include CEOs, board of directors, CFOs, COOs, down to VP level) continued to show a drop in turnover for all key categories for the third quarter of 2010.  The declining trend in executive turnover has continued since the first quarter of 2008 for all key executive turnover categories (see the CEO, CFO and C-level graphs below for quarterly turnover comparisons).  While the first three quarters of 2010 continued to show significant declines in executive turnover, particularly when compared with the first, second and third quarters of 2009, we are beginning to see the overall executive turnover declines slowing when the quarterly figures are compared with each previous quarter of 2010.  

• Third quarter 2010 CEO changes dropped 27%, CFO changes dropped 8% and overall C-level changes for the third quarter dropped 32% respectively when compared with the third quarter totals for 2009. 

• The drop in changes for the third quarter of 2010 was much smaller when compared with the second quarter totals for 2010 – the drop was 21% for CEOs, 7% for CFOs and 6% for overall C-level changes. 

While monthly executive turnover numbers have been smaller since early 2008, the investment opportunities they represent are still quite significant.  Below Liberum put together three graphs representing the total executive related changes (CEOs, CFOs and C-level changes) by quarter for 2005 through the third quarter of 2010.  

Yesterday’s long awaited announcement on who would replace Mark Hurd as Hewlett Packard’s HPQ (NYSE) CEO went down with a thud.  The selection of Leo Apotheker, a former short lived CEO of SAP, was not hailed by the market nor many analysts.  I am on the other side of the fence on this appointment.  I think HP’s board has come up with a surprisingly excellent choice.While Apotheker was not very successful while CEO at SAP he faced a great deal of opposition within the organization and more than likely learned what he would need to do to be successful a second time around.  SAP’s culture did not fit his needs for change.  He should be able to make more change at HP than he was able to accomplish at SAP.

HP’s board appears to have gone strategic in its appointment.  Its decision to go outside the firm for its selection should in the long run work out.  Apotheker has the right background to help HP move into the software side of the industry in a big way without seriously jeopardizing its current bread and butter businesses.  Who knows he might even move to go for an acquisition of SAP or some kind of alliance.  If he can manage to keep many of the key players currently at HP and work with them to get the firm’s overall strategy right, he has a great chance at being very successful. He is a strategic thinker and he understands technology.

Shareholders and investors need to give him time to get up to speed.  Stay tuned this latest selection may turn out to be a really winner despite the conventional wisdom. 

Now that Nokia has brought on Stephen Elop, the former Microsoft software executive, to be the new CEO, questions remain what he can do to revive the fortunes of Nokia.  I have not been one of Nokia’s fans of its latest CEO hire.  While Elop is really smart and effective executive, I am not convinced he was the right person for the job.  J. Gerry Purdy, PhD the Principal Analyst for Mobile Trax LLC has written a terrific piece in RCR Wireless outlining his ideas on exactly what Elop needs to do to be successful at the helm of Nokia.  According to Purdy,

… all is not well with Nokia as you walk in the door. While the volume of cell phone production is very high, it’s clearly not the right mix of models, software and services. And, while you were one of the first firms to develop a smart phone with the N95 in 2006, you have clearly fallen in the fast-growing smart phone segment, especially in the United States. Integrated multimedia smart phones are becoming the dominate handset device type in the developed world, and Nokia needs to get back to creating truly great and innovative products.

… There’s no way around the basic fact that you’ll have to make a number of major changes. You can’t keep designing products the way you have in the past. You can’t keep doing operating system software the way you have in the past. You can’t ignore major changes in the way people use their phones (highly integrated multimedia and almost all oriented toward touch screens). You have to rebuild from the ground up. You have to re-create a culture around Nokia being “cool” again. You can’t simply declare it. Rather, you have to actually do it.

Purdy goes on to make concrete suggestions on exactly what he thinks Elop needs to do including moving the corporate headquarters from Finland to the United States.  Many of his suggestions were right on target but the suggested HQ move is unrealistic for such an important Finnish firm.  Anyone interested in Nokia or the wireless industry should read Purdy’s entire piece.

Johnson and Johnson’s longtime CEO, Bill Weldon remains on the hot seat.  The numerous problems J&J has had with recalls and manufacturing oversight through its huge network of subsidiaries particularly its McNeil Consumer Healthcare firm continues to plague the firm and particularly the firm’s CEO.  Weldon will be testifying later today before a House Congressional Committee.  All eyes will be on weldon today to see how he responds to the criticism the firm has faced for its response to the continuing problems at McNeil as well as other parts of the firm.  Despite the recall related problems, J&J overall has continued to remain very profitable but J&J more than most drug firms has relied on its reputation as a means for success all these years.  Investors and analysts are beginning to question whether Weldon’s response to the problems were adequate.  More importantly whether he managed the crisis sufficiently to protect the firm’s reputation.  According to piece by Johanna Bennett in Barron’s Blog entitled J&J Reputation on the Line,

… a recent survey by CLSA analyst David Maris indicates that the company’s reputation among mothers and doctors may need a Band-Aide.

When 136 mothers and 50 pediatricians and general practitioners were asked to rate J&J’s formerly unassailable reputation before and after the recalls on a scale of one to 10 (1=horrible and 10=perfect), J&J’s score fell 26% from an eight to a 5.9, according Maris.

And for some respondents, the recalls have permanently dented their regard for the the health care titan.

Weldon has a difficult task ahead of him before Congress and his shareholders.  Despite his long reputation for fine management his survival as CEO may be an uphill battle as this problem continues to have legs.  Stay close to the news on this one.For more:New York TimesSeeking Alpha

It’s official Olli-Pekka Kallasvuo is out as CEO of Nokia NOK1V and in his place on September 21 is a former high level software executive from Microsoft, Stephen Elop.  Liberum has been talking about the need for change at Nokia going back to October 16, 2009.  The change at the top of Nokia was essential.  Many analysts have been delighted with the change.  The selection of 46 year old Elop has merit.  He was in charge of Microsoft’s Business Division and is extremely well versed in software which is the area the Nokia needs to focus on to get its smartphone business at a point where it is capable of competing again with the Apples, Motorolas and Google phones.  Elop also has had experience working with Nokia while at Microsoft and in his previous job at Macromedia.

The real question remains can Nokia without a true visionary at the top of the firm make the leap  to effectively compete on high end with Apple, RIM, Google and even Motorola.  I am somewhat skeptical.  Change is certainly afoot at Nokia.  Just a few hours earlier, Anssi Vanjoki, Nokia’s smartphone chief and a one time candidate for the CEO position, announced his resignation from the firm. Elop will now have a chance to appoint someone to his own specific liking.  The firm desperately needs a visionary at the helm and in some of the key management positions if it has real hope to get back near the top.

Investors must keep a very close eye on new management at Nokia.

Can Johnson & Johnson’s JNJ (NYSE) CEO, Bill Weldon, survive the firm’s repeated recalls?  First it was a series of small recalls then it turned into a flood.  Johnson & Johnson failed miserably to handle the public relations and the actual manufacturing related deficiencies in many of its McNeil Consumer Healthcare Division.  As time passes it is hard to believe, the somewhat bewildered CEO Bill Weldon will be able to hang on as CEO at J&J.  Mina Kimes wrote a terrific piece for Fortune that lays out the difficulties Weldon faces going forward.  According to Mimes’ story,

Weldon, who has kept a low profile for the majority of his eight-year tenure, must now fight to salvage not just McNeil’s reputation — but his own. Surveys of business executives conducted by CoreBrand show that favorability ratings of J&J’s management have dropped from 88.3% in 2006 to 80.9% last quarter. That’s a significant decline, according to Jim Gregory, the branding firm’s CEO. “There’s something not right here that needs attention,” Gregory says. “[Weldon] needs to change it — or there needs to be a change of management.”

… Though some corporate image pundits have called for the CEO to resign, insiders say Weldon is unlikely to depart before next year, when he will be 62, the age at which J&J leaders typically retire. In fact, two former executives say Weldon may stick around even longer. He has reportedly told his board, one says, that his two younger heirs apparent, Sheri McCoy, the head of J&J’s pharmaceuticals sector, and Alex Gorsky, the head of medical devices, aren’t prepared to assume his role.

Only time will tell.  Make sure to keep a close eye on the firm going forward.