- After almost nine years in the position
- Accolades, praise and thanks for Schulman
- Search for a successor
- Schulman spoke at length and said 131 words
(exechange) — San Jose, California, February 9, 2023 — Dan Schulman, chief executive of PayPal, is set to leave his position. As announced by PayPal Holdings Inc. in a news release and in a regulatory filing published on Thursday, February 9, 2023, Daniel H. (Dan) Schulman leaves his post as chief executive officer at the financial technology company, after almost nine years in the role, effective December 31, 2023.
PayPal will undertake a search for a successor.
It is a long goodbye. The announcement of Dan Schulman’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.
“To devote more time to my passions outside the workplace”
Dan Schulman’s planned departure from the CEO post is explained as follows. Schulman stated: “It has been a huge privilege to have the opportunity to lead this great company for the past 8 1/2 years. However, I’m at a point in my life where I want to devote more time to my passions outside the workplace.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26.3% of cases), implementation of a planned succession (15.7%) and the statement that the time was right for a change (9.5%), 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%) and conduct issues (2.1%). Rather rarely stated reasons are career change (2.1% of cases), health problems (1.8%), disagreement (1.2%), death (0.9%) and the desire for more time with family (0.6%). Sometimes, more than one reason was given. In 31.4% of cases, no reason was given.
Precise information regarding Dan Schulman’s future plans was not immediately available.
PayPal said: “President and CEO Dan Schulman has informed the Board of Directors of his intention to retire from PayPal on December 31, 2023, and that he will work with the Board on a smooth leadership transition. Schulman will continue to serve on the Board of Directors.”
PayPal further said: “On February 8, 2023, Dan Schulman, President and Chief Executive Officer, notified the Board of Directors (the “Board”) of PayPal Holdings, Inc. (the “Company”) of his intention to retire from the Company on December 31, 2023 or upon the appointment of a successor thereafter.”
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.
“Does not reflect any dispute or disagreement”
PayPal stated, regarding the change: “Mr. Schulman’s intention to retire does not reflect any dispute or disagreement with the Company.”
Share price decline since February 2021
The announcement follows a decline in PayPal Holdings Inc.’s share price of 67% since February 2021.
In the position of CEO since 2015
Dan Schulman became CEO of the Company in 2015.
His bio reads as follows:
- President and Chief Executive Officer of PayPal, since July 2015; served as the President and CEO-Designee of PayPal, from September 2014 to July 2015.
- Group President, Enterprise Group of American Express Company, from August 2010 to August 2014.
- President, Prepaid Group of Sprint Nextel Corporation, from November 2009 to August 2010, when Sprint Nextel acquired Virgin Mobile, USA.
131 words by Dan Schulman
In the news release announcing his departure as CEO of PayPal Holdings Inc., Dan Schulman received accolades, praise and thanks.
In announcing the leadership change, Dan Schulman spoke at length and said 131 words.
“I remain 100 percent committed”
Dan Schulman stated: “I’m proud of what we have accomplished at PayPal and of the incredibly talented and committed people I work with every day. Together, we have reimagined financial services and e-commerce, and worked to improve the financial health of our customers. PayPal makes a difference every day for its customers and communities and the Company is positioned for a great future. It has been a huge privilege to have the opportunity to lead this great company for the past 8 1/2 years. However, I’m at a point in my life where I want to devote more time to my passions outside the workplace. I remain 100 percent committed to working closely with the Board and my eventual successor for a smooth transition and to ensure we keep our positive momentum on track.”
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 110 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.
35% 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 9, 2022, to February 8, 2023), the average Push-out Score was 5.8, 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 35% 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 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 information technology sector, which includes PayPal Holdings 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, 19 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 Dan Schulman’s move determined
The Push-out Score regarding Dan Schulman’s move is explained point by point in the exechange report.
exechange reached out to PayPal and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 7.2023 ($).