With a Push-out Score of 0, the CEO departure at Pfizer Inc. is at the bottom of the scale and seems glorious.
It follows the pattern typical of well-prepared management changes.
As announced on October 1, Ian C. Read, age 65, leaves his post as chief executive officer at the pharmaceutical corporation after eight years in the big chair, effective December 31.
The lead time is 91 days.
Read’s duties will be taken over by Albert Bourla, age 56 and currently chief operating officer of Pfizer.
Read’s departure from the CEO post is explained as follows. Shantanu Narayen, lead independent director, said: “Today’s leadership announcement is part of a thoughtful, multi-year succession planning process.”
When interpreting corporate announcements, the maxim should be “trust, question and verify.” Thoughtful, multi-year succession planning process? This claim can stand up to the facts.
Bourla has over 25 years of experience with Pfizer and has worked his way up the corporate ladder. Prior to assuming the role of COO on January 1, he led Pfizer’s Innovative Health business.
It is a sign of a healthy organization when it can identify and groom the talent from within and elevate an internal person to the post of CEO.
Read will transition from his current role as chairman and CEO to executive chairman.
The CEO change is designed exactly as investors like it. The best time to hand over the helm is when the sea is calm. This seems to be the case at Pfizer. Its shares are now trading close to their record high, and Pfizer’s business is developing well. Of course, today’s success guarantees nothing for tomorrow, and there are challenges ahead: The healthcare sector in general has seen increased scrutiny over drug pricing, and Pfizer, which has been trying to sell its consumer healthcare business for the past year, is bracing for the patent expiration of its neurological disease treatment Lyrica.
The form and language of the announcement provide the cherry on the cake.
In the announcement from New York-based Pfizer, Ian Read receives accolades, praise and thanks.
Pfizer points out that since Read assumed the CEO role in 2010, Pfizer has achieved a total shareholder return of 250 percent, outperforming the S&P 500 index by 180 percentage points.
Lead Independent Director Shantanu Narayen says that “Pfizer now has a pipeline that we believe is as deep and strong as ever.”
In the announcement, Read does not need to praise himself. Instead, he compliments his successor and says that “Albert is the right person to guide Pfizer through the coming era.”
Albert Bourla thanks Read “for his constant support” and states that he is “fortunate to have him as both a mentor and friend.”
Conclusion: Form, language, age, notice period, tenure, share price development, official reason given, circumstances and the succession plan are consistent, reasonable and free of red flags.