Sober departure: Constellation Brands CEO Rob Sands steps down

With a Push-out Score of 4, the CEO departure at Constellation Brands Inc. is in the lower range of the scale and appears sober.

As announced on October 17, Robert S. (Rob) Sands, age 60, leaves his CEO post at the beverage alcohol company after almost 12 years in the role, effective March 1, 2019.

The lead time is 135 days.

Sands’s duties will be taken over by William A. (Bill) Newlands, currently chief operating officer of Constellation Brands.

Once Newlands becomes CEO, Rob Sands will assume the role of executive chair, and Richard Sands, who is currently executive chair, will assume the role of executive vice chair.

Rob Sands is the younger brother of Richard Sands and a son of the Company’s founder, the late Marvin Sands.

In the announcement from Victor, New York-based Constellation Brands, Rob Sands receives praise.

“The Wall Street Journal” noted that during Sands’s tenure as CEO, Constellation’s total shareholder return surged 967 percent compared with a 141 percent return for the S&P 500 index.

That speaks for itself, and according to the analysis model, no warning signs are recognizable so far. Age, notice period, tenure, share price development and the succession plan are inconspicuous.

Constellation Brands does not explicitly explain the reason for Sands’s move, leaving room for speculation. That’s the first point for the Push-out Score.

Sands steps aside at a critical time. Point number 2.

In August, the maker of Corona beer, Casa Noble tequila and Svedka vodka made a further $4 billion bet on Canadian cannabis producer Canopy Growth Inc. Constellation Brands first invested in Canopy Growth last year, when it bought a 10 percent stake.

The form and language of the announcement provide further warning signals and two additional points.

In the terse announcement, which consists of 346 words, the departing chief executive receives no accolades for concrete and quantified successes.

Moreover, it seems a little strange that Executive Chair Richard Sands praises the incoming CEO, but does not say a word about the outgoing CEO in the announcement.

At the age of 59, Bill Newlands is only one year younger than Rob Sands. A generational change at the top would certainly look different.

Newlands will become the first person outside the Sands family to take the CEO role. The alcohol-industry veteran is a relative newcomer to Constellation Brands. He joined the company in 2015 as chief growth officer, has served as chief operating officer since January 2017 and was appointed president in February 2018.

The constellation of the data suggests that the change at the top may be taking place right now because Constellation possibly needs a CEO with different skills. The Push-out Score of 4 suggests that the sitting CEO may have decided to leave his post after some subtle encouragement.