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What Companies Can Learn From Executive's Exits
Fremont: There are several reasons why the top executives of a company quit: the current roles not being in sync with their career plan, to become entrepreneurs, decide to retire; but their departure from the company has certain impacts, which might be good or bad. Here is what companies can learn from the executive exits.
Be Prepared For Financial Tremors
The exit of the top executive of a company might send tremors across the financials of a company. The resignation of Carl Peter Forester, CEO, Tata Motors, saw the stocks fall 9.23 percent to $15.35. In a similar feat, the shares of Tata Group fell sharply after the appointment of Cyrus Mistry as a successor to Ratan Tata. China Dongxiang’s shares fell by 8.4 percent after the resignation of its CEO, Sandrine Zernib. Spirit’s shares dropped for more than 10 percent after the resignation by its CFO Chew Fook Aun. These executives were looked up as leaders and their sudden exits did have a tremor on the company’s stocks.
However, if the investors are convinced that the executive would not be able to fulfill his or her commitments, the exit might not affect the stocks much. As in the case of Amag Pharmaceuticals, the stocks rose by 17.8 percent after the resignation of its CEO Brian J.H. Pereira. Yahoo’s stocks rose to more than five percent after its CEO Carol Bartz was fired.
