With a Push-out Score of 10, the CEO departure at Akorn Inc. is at the top of the scale and looks lackluster.
As announced on December 7, 2018, Rajat (Raj) Rai “has decided to retire” from the specialty generic pharmaceutical company.
Officially, it is clearly his own decision to leave the company after a long tenure as CEO of almost nine years. Furthermore, it speaks for him that he will “assist the board to ensure a smooth transition and remain in his role until the hiring date of the new chief executive.”
On the other hand, the circumstances surrounding his planned departure leave no reasonable doubt that he was forced to leave the CEO post.
Let’s first look at the hard facts.
At the age of 51, he seems quite young to retire. That’s the first point for the Push-out Score.
The change follows a decline in Akorn’s share price of 82 percent since February 2018. Point number 2.
Akorn does not explicitly provide a reason for Raj Rai’s move. Point number 3.
He leaves at a critical time. The announcement comes after the Delaware Supreme Court ruled that a rapid downturn in Akorn’s business was grounds for Fresenius SE to walk away from a $4.3 billion buyout of the company. Point number 4.
A permanent successor is not immediately available. Point number 5.
The form and language of the announcement provide points number 6 and 7.
In the announcement from the Lake Forest, Illinois-based Akorn, Raj Rai receives praise and thanks, but no accolades for concrete and quantified successes, no word of regret and no good wishes.
Chairman Alan Weinstein kept it short and issued 26 words regarding Raj Rai’s imminent exit: “We thank Raj for his years of service with Akorn and his success in building the company into a leading organization in a highly competitive industry.”
In the announcement from Akorn, Raj Rai remains silent.
Akorn stated in a regulatory filing: “The Board of Directors of the Company … and Mr. Rai have agreed that, for purposes of Mr. Rai’s employment agreement, his departure from the Company will be treated as a resignation for good reason.”
Generally speaking, for an employee to terminate the employment relationship for good reason, the employer must have taken action that results in a material negative change in the conditions under which the employee serves the company.
The conditions of Rai’s departure finally make it clear that he saw himself as being forced to leave, and the Push-out Score is 10.