- After almost 12 years in the position
- Praise and thanks for Erck
- John Jacobs taking over
- Erck said 70 words
(exechange) — Gaithersburg, Maryland, January 9, 2023 — Stan Erck, chief executive of Novavax, leaves his position. As announced by Novavax Inc. in a news release and in a regulatory filing published on Monday, January 9, 2023, Stanley C. (Stan) Erck leaves his post as chief executive officer at the biotechnology company, after almost 12 years in the role, effective January 23, 2023.
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.
Stan Erck’s duties as CEO will be taken over by John C. Jacobs, most recently President and Chief Executive Officer at Harmony Biosciences Holdings, Inc.
The fact that Stan Erck’s successor is brought in from outside suggests that the board may seek to stimulate change with fresh ideas and new initiatives.
In general, an outsider does not have the constraints of an insider when it comes to leading painful changes or making unpopular decisions.
“Fresh perspective”
Novavax did not give an explicit reason for Stan Erck’s departure from the CEO post. James F. Young, Chairman of the Board of Directors, said: “John is a seasoned industry leader who will bring a fresh perspective and deep industry expertise to Novavax.”
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 (16.4%) 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%), death (0.9%) and disagreement (0.6%). Sometimes, more than one reason was given. In 30.4% of cases, no reason was given.
Precise information regarding Stan Erck’s future plans was not immediately available.
“Retire”
Novavax said: “John C. Jacobs will succeed Stanley C. Erck as President and Chief Executive Officer and a member of the Board of Directors. The transition will be effective as of January 23, 2023. Mr. Erck will serve as an advisor to the Company for the next fifteen months to enable a smooth transition.”
Novavax further said: “Mr. Jacobs will succeed Stanley C. Erck, who provided the Board with notice on January 5, 2023 of his decision to retire as President and Chief Executive Officer and as a member of the Board, in each case effective as of January 23, 2023.”
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 CEO departure announcements over the past 12 months, the departing chief executive received a Push-out Score above the critical threshold of 5, indicating elevated pressure.
Share price decline since January 2022
The announcement follows a decline in Novavax Inc.’s share price of 92% since January 2022.
In the position of CEO since 2011
Stan Erck became CEO of the Company in 2011.
Erck was named president and chief executive officer of Novavax in April 2011.
He became a Novavax director in June 2009 and served as its executive chairman of the board beginning in February 2010.
From 2000 to 2008, Erck was president and chief executive officer of IOMAI Corporation, leading the company through an initial public offering and a merger with Intercell, an Austrian vaccine company, and through the development of a late-stage infectious disease product candidate.
Erck previously served as president and chief executive officer at Procept, a publicly traded immunology company, as vice president of corporate development at Integrated Genetics (now Genzyme), and in management positions with Baxter International.
Erck currently sits on the board of directors of MaxCyte, Inc.
He received an undergraduate degree from the University of Illinois and a master’s degree in business administration from the University of Chicago Booth School of Business.
70 words by Stan Erck
In the news release announcing his departure as CEO of Novavax Inc., Stan Erck received praise and thanks.
In the announcement of the leadership change, Stan Erck said 70 words.
“I look forward to supporting John”
Stan Erck stated: “My experience at Novavax, especially leading the company in the global pandemic response, has been the highlight of my 40-year career as a biotechnology leader. I’m grateful for the tireless efforts of our employees, the support of the Board and the continued commitment from our key partners in our quest to protect the health of people everywhere. I look forward to supporting John and the company during the leadership transition.”
Over the past 12 months, 27% 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, 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 9, 2022, to January 8, 2023), the average Push-out Score was 5.7, according to exechange data. References to conduct issues, disagreements and irregularities lead to the highest Push-out Scores. When performance issues, time with family 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 health care 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, utilities and financials sectors, as measured by average Push-out Scores.
In the health care sector, which includes Novavax Inc., the average Push-out Score over the past 12 months was 6.8, which is well above the critical threshold of 5.
In the health care sector, 27 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 Stan Erck’s move determined
The Push-out Score regarding Stan Erck’s move is explained point by point in the exechange report.
exechange reached out to Novavax and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 3.2023 ($).