- After less than two and a half years in the position
- Praise and thanks for Fernandez
- Carl Eschenbach taking over
(exechange) — Pleasanton, California, December 20, 2022 — Chano Fernandez, co-chief executive of Workday, leaves his position. As announced by Workday Inc. in a news release and in a regulatory filing published on Tuesday, December 20, 2022, Luciano G. (Chano) Fernandez leaves his post as co-chief executive officer at the provider of enterprise cloud applications for finance and human resources, after less than two and a half years in the role, effective immediately.
The average tenure of CEOs who announced their departure over the past 12 months was 8.2 years. Around 23% of CEOs left their posts within three 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.
Chano Fernandez’s duties as co-CEO will be taken over by Carl M. Eschenbach, most recently general partner at Sequoia Capital Operations, LLC.
Carl Eschenbach will serve as co-CEO alongside Aneel Bhusri, Workday’s co-CEO, co-founder, and chair, through January 2024, Workday’s fiscal year end.
“At that time, Aneel and the Board expect that Carl will assume sole CEO responsibilities and Aneel will assume a full-time role as executive chair and will remain as chair of the Board of Directors,” the Company stated.
Already a director
Eschenbach has already been a member of the board of directors of Workday. Generally speaking, most director-turned-CEO appointments occur following a sudden resignation of the outgoing CEO and signal a lack of preparedness on the company’s part to groom internal talent. Directors-turned-executives represent a blend of outsider and insider.
They don’t have the constraints of a pure insider when it comes to leading painful changes or making unpopular decisions, and they have more company knowledge than a pure outsider.
Having been a director, Eschenbach understands the expectations and dynamics of the board and has knowledge of Workday’s organization, risk-management practices and strategy.
“Massive opportunity in front of us”
Workday did not give an explicit reason for Chano Fernandez’s departure from the co-CEO post. Carl Eschenbach, co-CEO, Workday, said: “I’m thrilled to be expanding my role at Workday and working with Aneel, the rest of the leadership team, and our amazing group of employees to help us build on this great momentum and take hold of the massive opportunity in front of us.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26.7% of cases), implementation of a planned succession (16.4%) and the statement that the time was right for a change (8.5%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (6.4% of cases), personal reasons (3%) and conduct issues (2.4%). Rather rarely stated reasons are health problems (2.1% 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.
Precise information regarding Chano Fernandez’s future plans was not immediately available.
Workday said: “Chano Fernandez has stepped down as co-CEO and as a member of the Workday Board of Directors, effective immediately.”
Workday further said: “On December 14, 2022, Luciano G. Fernandez informed the Board of his intention to resign from his position as Workday’s co-CEO and a member of the Board, effective as of the Effective Date.”
Generally, resignations are seen as formally voluntary departures. Still, CEOs may also be pressured to resign. In fact, 77% of the time “resign” was used in the past 12 months, the CEO departure received a Push-out Score above the critical threshold of 5, indicating elevated pressure.
“Not due to any disagreements”
Workday stated, regarding the change: “Mr. Fernandez’s decision to resign as a director was not due to any disagreements with Workday on any matter relating to Workday’s operations, policies, or practices.”
Share price decline since December 2021
The announcement follows a decline in Workday Inc.’s share price of 35% since December 2021.
In the position of co-CEO since 2020
Chano Fernandez became co-CEO of the Company in 2020.
Fernandez is expected to remain active with the company through April 2023, at which point he will transition towards retiring from Workday.
Chano Fernandez has served as a director since April 2021.
Fernandez joined Workday in 2014 and has served as the Company’s co-Chief Executive Officer since August 2020.
He has held other various leadership roles at Workday, including Co-President from February 2018 to August 2020; Executive Vice President, Global Field Operations from February 2017 to February 2018; and President, EMEA and APJ from 2014 to February 2017.
From 2007 to 2013, Fernandez served as Senior Vice President and Head of Innovation Sales at SAP EMEA, a global provider of enterprise application software.
Prior to that, he was Vice President of EMEA Sales at Infor, Inc., a founding partner and General Manager at Blue C, and a senior consultant for McKinsey & Company.
No statement by Chano Fernandez
In the news release announcing his departure as CEO of Workday Inc., Chano Fernandez received praise and thanks.
The announcement of the leadership change does not include a statement by Chano Fernandez.
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 109 words. The longest statement was 382 words. The shortest statement was 23 words. Leadership transitions in which departing CEOs provide conspicuously short or no explanations for their move are statistically associated with elevated pressure and show an increased incidence of Push-out Scores above the critical threshold of 5, according to exechange data.
33% 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 329 CEO departures in the Russell 3000 Index evaluated over the past 12 months (December 20, 2021, to December 19, 2022), the average Push-out Score was 5.6, 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 other opportunities were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 33% 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 information technology sector well above the critical threshold
Some industries are under generally higher pressure than others, and CEOs are feeling the strain. In the past 12 months, the communication, consumer staples and health care sectors showed the highest average Push-out Scores. By contrast, pressure on CEOs was lowest in the real estate, industrials and financials sectors, as measured by average Push-out Scores.
In the information technology sector, which includes Workday Inc., the average Push-out Score over the past 12 months was 6.1, which is well above the critical threshold of 5.
In the information technology sector, 17 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 Chano Fernandez’s move determined
The Push-out Score regarding Chano Fernandez’s move is explained point by point in the exechange report.
exechange reached out to Workday and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 52.2022 ($).