- After about four and a half years in the position
- Bill Meury taking over
- Paul will transition to president of R&D and CSO at Karuna
- Paul said 107 words
(exechange) — Boston, Massachusetts, December 6, 2022 — Steve Paul, chief executive of Karuna, leaves his position. As announced by Karuna Therapeutics Inc. in a news release and in a regulatory filing published on Tuesday, December 6, 2022, Steven (Steve) Paul leaves his post as chief executive officer at the clinical-stage biopharmaceutical company, after about four and a half years in the role, effective January 3, 2023.
The average tenure of CEOs who announced their departure over the past 12 months was 8.2 years. This is according to data collected by CEO-exit research firm exechange.
exechange tracks CEO departures at the 3,000 largest publicly traded companies in the U.S., examines the reasons CEOs leave and determines the Push‑out Score™, a measure of pressure on departing chief executives on a scale of 0 to 10.
Steve Paul’s duties as CEO will be taken over by Bill Meury, most recently partner at Hildred Capital Management.
The fact that Steve Paul’s successor is brought in from outside suggests that the board may seek to stimulate change with fresh ideas and new initiatives.
“Clinical development and commercialization”
Steve Paul’s departure from the CEO post is explained as follows. Christopher Coughlin, the Company’s lead independent director, said: “Bill’s appointment as president and CEO is the result of a thoughtful succession plan initiated by Steve’s desire to follow his passion, the science, and focus on the continued growth of Karuna’s research and development efforts. As we considered the natural evolution of the Company, Bill’s leadership and expertise launching and commercializing medicines for psychiatric and neurological conditions was a seamless fit for Karuna, aligning with our strategy for late-stage clinical development and commercialization.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months were performance issues (25.5% of cases), implementation of a planned succession (16.9%) and the statement that the time was right for a change (8.6%), according to exechange data. Other motives given for CEO exits included the outgoing CEO’s wish to pursue other opportunities (6.4% of cases), personal reasons (3.4%) and conduct issues (2.5%). Rather rarely stated reasons were health problems (2.5% of cases), career change (2.1%), the desire for more time with family (0.9%), disagreement (0.6%) and death (0.6%). Sometimes, more than one reason was given. In 30.1% of cases, no reason was given.
Paul will transition to president of research and development and chief scientific officer at Karuna
Karuna stated: “Mr. Meury will succeed Steve Paul, M.D., the current president, chief executive officer and chairman, who will transition to president of research and development and chief scientific officer and continue to serve as a member of the board following the effective date. At that time, Christopher Coughlin, the Company’s lead independent director, will assume the role of chairman of the board. ”
Karuna said: “Following the Effective Date, Dr. Steve Paul, the Company’s current President and Chief Executive Officer, will transition to President of Research and Development and Chief Scientific Officer, and continue to serve as a member of the Board.”
Share price increase since December 2021
The announcement follows an increase in Karuna Therapeutics Inc.’s share price of 84% since December 2021.
In the position of CEO since 2018
Steve Paul became CEO of the Company in 2018.
Steven Paul, M.D. has served as the Company’s Chairman and Chief Executive Officer since August 2018 and as a member of the Company’s board of directors since March 2018.
Previously, Paul was the President and Chief Executive Officer of Voyager Therapeutics, Inc. from September 2014 to August 2018.
Paul also serves as a venture partner at Third Rock Ventures, LLC, a life sciences venture capital firm.
Together with Third Rock, Paul co-founded Sage Therapeutics, Inc. and Voyager Therapeutics, Inc. From August 2010 to September 2014, Paul was a professor of neuroscience, psychiatry and pharmacology at Weill Cornell Medical College.
Prior to that, from 1993 to 2010, Paul held several key positions at Eli Lilly and Company, or Eli Lilly, including Executive Vice President for Science and Technology, President of the Lilly Research Laboratories, Vice President of Neuroscience (CNS) Research and Group Vice President of Discovery Research.
Prior to Eli Lilly, from 1988 to 1993, Paul served as the Scientific Director of the National Institute of Mental Health, or NIMH.
From 1982 to 1988 Paul served as a laboratory branch chief and tenured investigator at NIMH.
Paul also served as Medical Director in the Commissioned Corps of the United States Public Health Service.
Paul is an elected fellow of the American Association for the Advancement of Science and a member of the National Academy of Medicine.
Paul received his B.A. in Biology and Psychology from Tulane University, and his M.S. and M.D. degrees from the Tulane University School of Medicine.
107 words by Steve Paul
In the just-released announcement of the leadership change, Steve Paul said 107 words.
“Advance other innovative medicines in our pipeline”
Steve Paul stated: “To say I am proud of the work we have accomplished to date would be an understatement. As a result of the team’s unwavering commitment, we are on the path to potentially deliver the first new class of medicine for people living with schizophrenia in more than 50 years. In my new role, I will continue to help the team deliver on the promise of KarXT and advance other innovative medicines in our pipeline. I have dedicated my career to solving the challenges of treating serious mental illness and I look forward to continuing my journey with Karuna, partnering with Bill and the rest of my colleagues.”
Over the past 12 months, 26% of all outgoing CEOs remained silent in the departure announcement, according to data compiled by exechange. Departing CEOs who did make a statement said an average of 111 words. The longest statement was 382 words, and the shortest statement was 23 words. Leadership transitions in which departing CEOs provide conspicuously short, excessively long or no explanations for their move are statistically associated with increased pressure and more often show Push-out Scores above the critical threshold of 5, according to exechange data. In contrast, leadership changes are statistically associated with low pressure when departing CEOs speak more about their successors than their successes.
32% of CEOs are forced out or fired
When CEO departures are announced, exechange determines the Push-out Score on a scale of 0 to 10 to assess how likely it is that the chief executive was pushed out or felt pressure to leave the position, with 0 being most likely a voluntary move and 10 being most likely a forced exit. Anything over a 5 indicates that there are valid reasons to believe an executive may have been pushed out.
Of the 326 CEO departures in the Russell 3000 Index evaluated over the past 12 months (December 6, 2021, to December 5, 2022), the average Push-out Score was 5.5, according to exechange data. References to conduct issues, disagreements and irregularities lead to the highest Push-out Scores. When time with family, performance issues or personal reasons were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 32% of the CEO departure events from the past 12 months received Push-out Scores of 8 or higher.
In other words, in the past 12 months, three in 10 departing CEOs were forced out or fired.
Pressure in the health care sector well above critical threshold
Some industries are under generally higher pressure than others, and CEOs are feeling the strain. In the past 12 months, the communication, health care and consumer staples sectors showed the highest average Push-out Scores. By contrast, pressure on CEOs was lowest in the real estate, financials and industrials sectors, as measured by average Push-out Scores.
In the health care sector, which includes Karuna Therapeutics Inc., the average Push-out Score over the past 12 months was 6.6, which is well above the critical threshold of 5.
In the health care sector, 22 exiting CEOs received Push-out Scores of 8 or higher over the past 12 months, indicating that they were most likely forced out or faced strong pressure to step down.
Push-out Score for Steve Paul’s move determined
The Push-out Score regarding Steve Paul’s move is explained point by point in the exechange report.
exechange reached out to Karuna and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 50.2022 ($).