- After around 16 years in the position
- Praise and thanks for Rust
- Raj Talluri taking over
- Rust kept it short and said 56 words
(exechange) — Fremont, California, December 29, 2022 — Harrold Rust, chief executive of Enovix, leaves his position. As announced by Enovix Corp. in a news release and in a regulatory filing published on Thursday, December 29, 2022, Harrold J. Rust leaves his post as chief executive officer at the manufacturer of lithium-ion batteries, after around 16 years in the role, effective January 18, 2023.
It is the end of an era.
The average tenure of CEOs who announced their departure over the past 12 months was 8.3 years. Around 14% of CEOs left their posts after more than 15 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.
Harrold Rust’s duties as CEO will be taken over by Raj Talluri, most recently Senior Vice President and General Manager of the Mobile Business Unit at Micron Technology Inc.
The fact that Harrold Rust’s successor is brought in from outside suggests that the board may seek to stimulate change with fresh ideas and new initiatives.
“Now is the time”
Enovix did not give an explicit reason for Harrold Rust’s departure from the CEO post. Enovix Executive Chairman T.J. Rodgers said: “Enovix has built and demonstrated with leading customers a battery architecture with significant competitive advantages in performance and now is the time to build a company that can truly transform the Lithium-ion battery industry.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26.2% of cases), implementation of a planned succession (16.3%) and the statement that the time was right for a change (8.4%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (6.3% 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 31% of cases, no reason was given.
Precise information regarding Harrold Rust’s future plans was not immediately available.
Enovix said: “Talluri replaces CEO and Co-Founder Harrold Rust, who is retiring from his position and the board but will serve in an advisory capacity to support the leadership transition.”
Enovix further said: “On December 23, 2022, Harrold Rust determined that he will retire as President and Chief Executive Officer and as a member of the Board of Directors (the “Board”) of Enovix Corporation (the “Company”), effective as of the date of his successor’s appointment to each such position.”
Generally, retirements are seen as formally voluntary departures. Still, CEOs may also be pressured to accelerate their retirement plans. In fact, 32% of the time “retire” 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 the result of any disagreement”
Enovix stated, regarding the change: “Mr. Rust’s decision to retire as President and Chief Executive Officer and as a member of the Board is not the result of any disagreement with the Company regarding the Company’s operations, policies or practices.”
Share price decline since December 2021
The announcement follows a decline in Enovix Corp.’s share price of 67% since December 2021.
In the position of CEO since 2006
Harrold Rust became CEO of the Company in 2006.
Following the date of his successor’s appointment as President and Chief Executive Officer, Rust will continue to provide services to the Company for a brief transition period in an advisory role which has not yet been determined.
Harrold J. Rust has served as the Company’s President and Chief Executive Officer and as a member of the Company’s Board of Directors since July 2021 and previously served as Legacy Enovix’s President and Chief Executive Officer from November 2006, when he founded Legacy Enovix, to July 2021.
Since July 2021, Rust has served as President and Chief Executive Officer and as a member of the Board of Directors of Enovix Operations Inc., a wholly owned subsidiary of Enovix Corporation.
From April 2002 to September 2006, he served as vice president of FormFactor, Inc., a 3D material semiconductor testing company.
Rust received a M.S. in Mechanical Engineering from Stanford University and a B.S. in Mechanical Engineering from the University of California, Davis.
56 words by Harrold Rust
In the news release announcing his departure as CEO of Enovix Corp., Harrold Rust received praise and thanks.
In the announcement of the leadership change, Harrold Rust kept it short and said 56 words.
“It’s time for me to pass the baton to a new leader”
Harrold Rust stated: “After starting the company over 15 years ago with life-long friends and colleagues it’s time for me to pass the baton to a new leader who can take Enovix to the next level. I couldn’t be more excited that Raj has chosen to continue our mission of creating a better world through innovation in energy storage.”
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 108 words. The longest statement was 382 words. 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 elevated pressure and show an increased incidence of Push-out Scores above the critical threshold of 5.
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 332 CEO departures in the Russell 3000 Index evaluated over the past 12 months (December 29, 2021, to December 28, 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 industrials sector substantially below 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 industrials sector, which includes Enovix Corp., the average Push-out Score over the past 12 months was 4.3, which is substantially below the critical threshold of 5.
Nevertheless, even in this sector, some CEOs were compelled to leave their posts under what appeared to be severe stress. In the industrials sector, 10 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 Harrold Rust’s move determined
The Push-out Score regarding Harrold Rust’s move is explained point by point in the exechange report.
exechange reached out to Enovix and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 1.2023 ($).