Stale exit: MetLife CEO Steve Kandarian retires

With a Push-out Score of 3, the CEO departure at MetLife Inc. is in the lower range of the scale and looks stale.

As announced on January 8, 2019, Steven (Steve) Albert Kandarian is retiring as chairman, president and CEO of the nation’s second-biggest life insurer, effective April 30. His duties as president and CEO will be taken over by Michel A. Khalaf, 54 years old and currently president, U.S. Business and EMEA of MetLife.

The hard data on Kandarian’s departure are inconspicuous. His age of 66 years, his tenure as CEO of 8 years, the notice period of 112 days and the fact that his successor was groomed internally clearly point to a smooth transition.

Furthermore, the form of the announcement from the New York-based MetLife is hardly objectionable. In addition, the short-term share price performance shows no acute pressure to act. In a weak market environment, the MetLife share has lost 20 percent in value over the previous 12 months, outperforming its rival Prudential Financial Inc., which suffered a 30 percent decline in its share price.

But a closer look reveals several red flags.

Kandarian, who turns 67 in March, is already beyond MetLife’s customary retirement age of 65. While a reason for the change is not explicitly provided, his departure seems overdue. That’s the first point for the Push-out Score.

MetLife is at a critical juncture. Point number 2. The company disclosed in 2017 that it failed to pay thousands of people owed pension payments. Probes including an investigation by the Securities and Exchange Commission are continuing.

Is the leadership change a break with the era of the incumbent CEO or a sign of continuity? The language in the announcement points to the former. That’s point number 3 for the Push-out Score.

The incoming CEO’s statement is peppered with thinly veiled criticism. Khalaf says: “By accelerating revenue growth, further optimizing our portfolio, and strengthening expense discipline, we will become a more financially successful company. This will help us meet our obligations to customers, create more opportunities for employees, and deliver stronger returns to shareholders.”

Khalaf puts plenty of salt in open wounds.

In two concise sentences, he indirectly addresses deficits in seven areas: sluggish revenue growth, suboptimal portfolio, weak expense discipline, low financial success and neglect of customers, employees and shareholders.

Shares in MetLife have returned 32 percent since Kandarian started as CEO in 2011, significantly less than MetLife’s rival Prudential Financial, insurance industry indices and the broader market.

Conclusion: Linguistic peculiarities in the announcement, non-transparent reason and challenging circumstances are three red flags. The Push-out Score of 3 suggests significant pressure on Kandarian to eventually leave after a mixed tenure.

MetLife did not respond to a message seeking comment.