With a Push-out Score of 9, the CEO departure at Coty Inc. is in the upper range of the scale and appears gruff.
As announced on November 12, 2018, Camillo Pane leaves his post as CEO at the beauty company.
Officially, he resigned “for family reasons.”
At this point, all alarm bells can ring. “Family reasons” are often seen as a code for a firing.
On the other hand, there are indeed cases where “family reasons” are not a pretext or merely a subordinate reason for a management change, but rather the decisive reason.
It is therefore necessary to examine the case point by point, without prejudice, particularly because companies must not mislead investors.
Since there is no more detailed explanation, the official reason given is to be classified as non-transparent. That’s the first point for the Push-out Score.
It is a remarkable coincidence that Pane’s move comes at a critical time for Coty. Point number 2.
Five days earlier, Coty spooked investors by saying it was grappling with supply chain issues that could hurt its performance.
Coty struggled to digest its $12 billion acquisition of beauty brands from Procter & Gamble Co. in 2016.
If Pane were to leave the company for family reasons only, it would make sense for Coty to look for a successor and name a temporary one.
But this is not the case.
His duties will be taken over by Pierre Laubies, age 62 and most recently chief executive of coffee company Jacobs Douwe Egberts (JDE). The fact that his successor is brought in from outside suggests that the board may seek to stimulate change with fresh ideas. It’s certainly not a coincidence that Coty also announced that its board is “commencing a renewal process to bring new perspectives to the company” and that Peter Harf is taking over the chairman role from Bart Becht effective immediately. Point number 3.
Pane leaves his post effective immediately. Point number 4.
The form and language of the announcement provide points number 5 and 6.
It is striking that Coty highlights the fact that at JDE, Laubies “successfully integrated the ex Mondelez coffee business fully realizing the associated synergies.” Coincidentally, Coty can make good use of his very skills right now.
In the announcement from New York-based Coty, Camillo Pane receives praise and thanks, but no accolades for concrete and quantified successes, no word of regret and no good wishes.
Moreover, he does not get a chance to speak in the announcement. Thus, the suspicion that there may be more than just family reasons is becoming more and more obvious.
His low age (48 years), short tenure as CEO (two years and one month) and the fact that his move follows a decline in Coty Inc.’s share price of 70 percent since August 2016 make for points numbers 7, 8 and 9.
Conclusion: Non-transparent reason, critical time, succession issues, short notice period, formal anomalies and linguistic peculiarities in the announcement, low age, short tenure and poor share price development are nine red flags. It seems evident that Pane left under strong pressure and that “family reasons” are at least not the only reason for his move. Apparently, the official reason given is only a pretext, but this cannot be proven beyond doubt.