With a Push-out Score of 7, the CEO departure at Bunge Ltd. is in the upper range of the scale and appears unceremonious.
As announced on December 10, 2018, Soren W. Schroder will step down from his CEO post at the agribusiness and food company after approximately five and a half years in the role.
His time in office is appropriate, and in the announcement from the White Plains, New York-based Bunge, Schroder receives accolades and praise.
But a successor is not yet in sight. That’s the first point for the Push-out Score.
Schroder is 57 years old. His low age raises questions, and precise information regarding his future plans was not immediately available. Point number 2.
The announcement follows a decline in Bunge’s share price of 35 percent since June 2015. Point number 3.
Bunge did not explicitly explain the reason for Schroder’s departure. Schroder’s own statement does not help much either. He states: “We are making solid progress, and it is the right time to turn over the leadership reins.” The right time? In the given context, this statement seems somewhat contradictory, and it remains open as to why he is leaving now and what exactly triggered his move. Point number 4.
At the same time, it is obvious that the circumstances of the change are challenging. Point number 5.
The CEO departure announcement comes five weeks after activist shareholders D.E. Shaw and Continental Grain reached a settlement with Bunge that added four directors and triggered a strategic review of the company.
The two-century-old commodities trader is vulnerable to takeover attempts by rivals Archer-Daniels-Midland Co. and Glencore Plc.
The form and language of the announcement provide further signals for pressure on Schroder, resulting in points 6 and 7.
In the announcement, the departing chief executive receives no explicit word of thanks, no word of regret and no good wishes.
Kathleen Hyle, 60, who became Chair of the Board, effective immediately, released 19 words regarding the long-standing chief executive Schroder: “The company is well positioned for long-term growth with the strong foundation that has been established under Soren’s leadership.”
That may sound nice, but it can also be understood as poisoned praise. It is at least ambiguous because it can hardly be read differently in the given context, as if Bunge, in Hyle’s eyes, now requires a manager with different skills to build on the foundation.
Conclusion: Succession issues, low age, poor share price development, non-transparent reason, critical time, formal anomalies and linguistic peculiarities in the announcement are seven red flags.
It is not completely certain what forces eventually triggered Soren Schroder’s move, but the change shows the typical pattern of a forced departure. There are more red flags than one can count on the fingers of one hand.