- After about 12 years in the position
- Accolades, praise and thanks for Fanning
- Chris Womack taking over
- Fanning will remain as Executive Chairman at Southern
- Fanning spoke at length and said 176 words
(exechange) — Atlanta, Georgia, January 5, 2023 — Tom Fanning, chief executive of Southern, leaves his position. As announced by Southern Co. in a news release on Thursday, January 5, 2023, Thomas A. (Tom) Fanning leaves his post as chief executive officer at the energy provider, after about 12 years in the role, effective immediately following the conclusion of Southern Company’s 2023 Annual Meeting of Stockholders.
The average tenure of CEOs who announced their departure over the past 12 months was 8.3 years. Around 30% of CEOs left their posts after more than 10 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.
Tom Fanning’s duties as CEO will be taken over by Chris Womack, currently chairman, president and CEO of the Georgia Power unit at Southern Co.
Last year’s annual meeting was held on May 25. The timing for this year’s event has not yet been announced.
Tom Fanning’s move coincides with a management shake-up also involving the positions of chairman of the Board of Directors, CEO and president of Alabama Power; chairman of the Board of Directors, CEO and president of Southern Company Gas; and president of Southern Nuclear.
“Succession planning”
The planned management change is explained as follows. David J. Grain, Southern Company’s lead independent director, said: “The Board has been actively engaged in succession planning for the past several years, and after consideration of a number of candidates, we unanimously selected Chris as our new Chief Executive Officer and president. Chris’ proven leadership, alignment with our values and ability to deliver strong results makes him a terrific choice to lead Southern Company.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26.6% of cases), implementation of a planned succession (16.1%) 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% 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%), death (0.9%) and disagreement (0.6%). Sometimes, more than one reason was given. In 31% of cases, no reason was given.
Fanning will remain as Executive Chairman at Southern
Southern stated: “Thomas A. Fanning, 65, the current chairman of the Board, CEO and president of Southern Company, will relinquish the role of president upon Womack’s assumption of the role in March and assume the role of Executive Chairman of the Board of Directors upon Womack’s assumption of the role of CEO. ”
Share price increase since January 2018
The announcement follows an increase in Southern Co.’s share price of 54% since January 2018.
In the position of CEO since 2010
Tom Fanning became CEO of the Company in 2010.
Fanning has held numerous leadership positions across the Southern Company system during his 40 years with the Company.
He served as Executive Vice President and Chief Operating Officer of the Company from 2008 to 2010, leading the Company’s generation and transmission, engineering and construction services, research and environmental affairs, system planning and competitive generation business units.
He served as the Company’s Executive Vice President and Chief Financial Officer from 2003 to 2008, where he was responsible for the Company’s accounting, finance, tax, investor relations, treasury and risk management functions.
In those roles, he also served as the chief risk officer and had responsibility for corporate strategy.
He served as the co-chair of the Electricity Subsector Coordinating Council, the principal liaison between the federal government and the electric power sector to protect the integrity of the national electric grid. His leadership in the cybersecurity area was recognized by the U.S. Senate in 2019 with an appointment to the Cyberspace Solarium Commission, a group developing a protection strategy for the cyberspace interests of the United States.
In 2021, the Cybersecurity and Infrastructure Security Agency appointed Fanning as chairman of the agency’s newly formed Cybersecurity Advisory Committee, a group that provides recommendations on cybersecurity programs and policies.
Fanning is a Director of Vulcan Materials Company, serving as a member of the Audit Committee and the Compensation Committee.
He served on the Board of Directors of the Federal Reserve Bank of Atlanta from 2012 to 2018 and is a past chairman.
He also served on the Board of Directors for the St. Joe Company, a real estate developer and asset manager, from 2005 to 2011.
Management shake-up
Tom Fanning’s move coincides with a management shake-up. In addition, the Board of Directors also announced the following executive appointments as part of the company’s succession and management transition plan:
Effective as of March 31, 2023, Kimberly S. (Kim) Greene, 56, has been named chair of the Board of Directors, CEO and president of Georgia Power.
Effective immediately, Jeff Peoples, 63, has been named chairman of the Board of Directors, CEO and president of Alabama Power.
Effective as of March 31, 2023, James Y. (Jim) Kerr II, 58, has been named chairman of the Board of Directors, CEO and president of Southern Company Gas.
Effective as of March 31, 2023, Peter (Pete) P. Sena III, 59, has been named president of Southern Nuclear and remains as Chief Nuclear Officer. Stephen Kuczynski will remain chairman and CEO of Southern Nuclear.
176 words by Tom Fanning
In the news release announcing his departure as CEO of Southern Co., Tom Fanning received accolades, praise and thanks.
In the announcement of the leadership change, Tom Fanning spoke at length and said 176 words.
“Now is an ideal time”
Tom Fanning stated: “Chris’ leadership, vision and integrity during his career with Southern Company have uniquely prepared him to guide Southern Company into a new era. With our recent progress at Plant Vogtle and continued conversion of our operations towards net zero emissions, I believe that now is an ideal time to transition to new leadership. I have confidence that Chris will continue our progress and deliver on Southern Company’s commitment to providing clean, safe, reliable and affordable energy and customized solutions to customers across the United States. I look forward to working closely with Chris over the next five months as he assumes this new role and to focusing on an effective transition in my new position as Executive Chairman of the Board of Directors… Each of Kim, Jeff, Jim and Pete has emerged as a proven leader with a strong track record of success and demonstrated skill working across the company. I expect each will flourish in their new position, further strengthening Southern Company’s deep management bench and bringing a fresh perspective to each of these businesses.”
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 335 CEO departures in the Russell 3000 Index evaluated over the past 12 months (January 5, 2022, to January 4, 2023), 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 utilities 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, financials and utilities sectors, as measured by average Push-out Scores.
In the utilities sector, which includes Southern Co., the average Push-out Score over the past 12 months was 4.5, 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 utilities sector, two 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 Tom Fanning’s move determined
The Push-out Score regarding Tom Fanning’s move is explained point by point in the exechange report.
exechange reached out to Southern and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 2.2023 ($).