- After around nine years in the position
- Praise and thanks for Schoenfelder
- Jason Keyes taking over temporarily
- Search for a successor
- Schoenfelder kept it short and said 45 words
(exechange) — New York, January 11, 2023 — Luke Schoenfelder, chief executive of Latch, leaves his position. As announced by Latch Inc. in a news release and in a regulatory filing published on Wednesday, January 11, 2023, Luke Schoenfelder leaves his post as chief executive officer at the maker of a full-building enterprise software-as-a-service (SaaS) platform, after around nine years in the role, effective immediately.
The average tenure of CEOs who announced their departure over the past 12 months was 8.3 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.
Latch will undertake a search for a successor.
Luke Schoenfelder’s duties as CEO will be taken over temporarily by Jason Keyes, most recently Partner and Managing Director at AlixPartners, as interim Chief Executive Officer.
The fact that Luke Schoenfelder’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.
Luke Schoenfelder’s move coincides with a management shake-up also involving the positions of Chief Financial Officer; and Chief Accounting Officer.
The Board has appointed Marc Landy as interim Chief Financial Officer, effective immediately.
“Accelerate its path toward profitability”
Latch did not give an explicit reason for Luke Schoenfelder’s departure from the CEO post. The Board stated: “The Board remains confident in the long-term outlook for the Company and believes that Jason’s and Marc’s broad experience leading and advising companies through transformative periods will enable Latch to drive operational performance and sustainable growth in this next chapter. As Latch evolves from a dynamic, promising technology start-up to a maturing business well-positioned for growth, the Board is confident in these new leaders’ abilities to instill greater focus on the Company’s operating processes and accelerate its path toward profitability.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26.9% of cases), implementation of a planned succession (16%) and the statement that the time was right for a change (8.3%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (6.2% 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 30.8% of cases, no reason was given.
Precise information regarding Luke Schoenfelder’s future plans was not immediately available.
Latch said: “Latch also announced the resignations of Luke Schoenfelder as the Company’s Chief Executive Officer and Chairman of the Board, as well as interim Chief Financial Officer Barry Schaeffer and Chief Accounting Officer Junji Nakamura.”
Latch further said: “On January 5, 2023, Luke Schoenfelder, Chief Executive Officer (“CEO”) and Chairman of the board of directors (the “Board”) of Latch, Inc. (the “Company”), resigned as the Company’s Chief Executive Officer and Chairman of the Board, effective as of January 11, 2023 (the “Effective Date”).”
Generally, resignations are seen as formally voluntary departures. Still, CEOs may also be pressured to resign. In fact, 76% of the time “resign” 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.
“Not the result of any disagreement”
Latch stated, regarding the change: “Under the employment agreement dated January 24, 2021, between the Company and Mr. Schoenfelder (the “CEO Employment Agreement”), Mr. Schoenfelder is deemed to have resigned as a director as of the Effective Date. Mr. Schoenfelder’s resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices. The Board intends to fill the resulting vacancy in due course pursuant to the Company’s Amended and Restated Bylaws. Following Mr. Schoenfelder’s departure, the Board consists of six directors, all of whom are independent.”
Share price decline since January 2022
The announcement follows a decline in Latch Inc.’s share price of 88% since January 2022.
In the position of CEO since 2013
Luke Schoenfelder became CEO of the Company in 2013.
Schoenfelder is the Co-Founder of Latch.
He also served as the chairman of the board of directors of Legacy Latch.
Prior to the founding of Latch, Schoenfelder developed technology products for the emerging world with backing from the Clinton Global Initiative, Habitat for Humanity, and the Dell Social Innovation Fund from 2011 to 2013.
Before that, Schoenfelder worked at Apple within the Retail and Worldwide Governmental Affairs practices, supporting international market expansion from 2008 to 2012.
45 words by Luke Schoenfelder
In the news release announcing his departure as CEO of Latch Inc., Luke Schoenfelder received praise and thanks.
In the announcement of the leadership change, Luke Schoenfelder kept it short and said 45 words.
“A proud stockholder and advisor going forward”
Luke Schoenfelder stated: “From co-founding Latch at my kitchen table to leading it to its current scale, I am enormously proud of the products we’ve delivered for customers, and I am excited to continue to support Latch’s new leadership team as a proud stockholder and advisor going forward.”
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, 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 338 CEO departures in the Russell 3000 Index evaluated over the past 12 months (January 11, 2022, to January 10, 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, one in three 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 consumer staples, communication 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 information technology sector, which includes Latch 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, 18 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 Luke Schoenfelder’s move determined
The Push-out Score regarding Luke Schoenfelder’s move is explained point by point in the exechange report.
exechange reached out to Latch and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 3.2023 ($).