- After almost seven years in the position
- Praise for Salmon
- Search for a successor
- Salmon said 65 words
(exechange) — Evansville, Indiana, February 2, 2023 — Tom Salmon, chief executive of Berry, is set to leave his position. As announced by Berry Global Group Inc. in a news release on Thursday, February 2, 2023, Thomas E. (Tom) Salmon leaves his post as chief executive officer at the supplier of packaging solutions for consumer goods and industrial products, after almost seven years in the role, effective December 31, 2023.
The average tenure of CEOs who announced their departure over the past 12 months was 8.5 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.
Berry will undertake a search for a successor.
It is a long goodbye. The announcement of Tom Salmon’s move comes up to 11 months prior to his planned departure from the post of CEO.
In general, a top executive who announces the departure particularly early may be considered a lame duck.
Lengthy lead times give boards extra time to find replacements, and they also create uncertainty. Would-be successors may jockey for attention and workers may wonder who is actually in charge.
Generally speaking, lame-duck leaders can take a forceful role in selecting a successor and are not expected to launch major shifts.
“Build on Tom’s legacy”
Berry did not give an explicit reason for Tom Salmon’s planned departure from the CEO post. Berry Lead Independent Director Stephen E. Sterrett stated: “Our primary goal in the CEO search process will be to identify a strong leader to build on Tom’s legacy, one who shares Berry’s core values and who will continue the Company’s momentum.”
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 (16.6%) and the statement that the time was right for a change (9.2%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (5.6% of cases), personal reasons (3.3%) and conduct issues (2.1%). Rather rarely stated reasons are career change (2.1% of cases), health problems (1.8%), death (0.9%), the desire for more time with family (0.6%) and disagreement (0.6%). Sometimes, more than one reason was given. In 30.8% of cases, no reason was given.
Precise information regarding Tom Salmon’s future plans was not immediately available.
Berry said: “Thomas “Tom” E. Salmon will retire as Chief Executive Officer and Chairman of the Board effective December 31, 2023.”
Generally, retirements are seen as formally voluntary departures. Still, CEOs may also be pressured to accelerate their retirement plans. In fact, 34% 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.
Companies often provide less precise information in their corporate announcements than in regulatory filings, which are sometimes published with a considerable delay and therefore cannot always be included in the exechange analysis. In the present case, a regulatory filing regarding Tom Salmon’s move was not available at the time of the analysis.
Share price increase since February 2017
The announcement follows an increase in Berry Global Group Inc.’s share price of 20% since February 2017. February 2017 is the month in which Salmon’s tenure as CEO began.
In the position of CEO since 2017
Tom Salmon became CEO of the Company in 2017.
Thomas E. Salmon has been Chief Executive Officer of Berry since February 2017.
Prior to becoming Chief Executive Officer of Berry, Salmon served as President and Chief Operating Officer of Berry since October 2016.
He previously served as President of Berry’s Consumer Packaging Division from November 2015 until October 2016, President of Berry’s Rigid Closed Top Division from November 2014 until November 2015, and President of Berry’s Engineered Materials Division from 2003 until November 2014.
Salmon serves on the board of directors and the compensation committee of Old National Bank.
Salmon holds a Bachelor of Business Administration from Saint Bonaventure University in Western New York.
65 words by Tom Salmon
In the news release announcing his departure as CEO of Berry Global Group Inc., Tom Salmon received praise.
In announcing the leadership change, Tom Salmon said 65 words.
“Unprecedented global disruption”
Tom Salmon stated: “I am extremely proud of all that our talented team has accomplished as we continue to execute our strategy and trailblaze the industry by developing sustainable and innovative packaging, even during a period of unprecedented global disruption. Thanks to the continued hard work and dedication of the entire organization, I am confident the Company is well-positioned to continue to deliver significant value for all stakeholders.”
Over the past 12 months, 25% 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 510 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.
34% 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 (February 2, 2022, to February 1, 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 time with family, performance issues or other opportunities were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 34% 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 materials sector marginally 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, health care and consumer staples 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 materials sector, which includes Berry Global Group Inc., the average Push-out Score over the past 12 months was 4.9, which is marginally 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 materials sector, four 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 Salmon’s move determined
The Push-out Score regarding Tom Salmon’s move is explained point by point in the exechange report.
exechange reached out to Berry and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 6.2023 ($).