- After eight years in the position
- Accolades, praise and thanks for Fritz
- Search for a successor
- Fritz said 128 words
(exechange) — Omaha, Nebraska, February 26, 2023 — Lance Fritz, chief executive of Union Pacific, is set to leave his position. As announced by Union Pacific Corp. in a news release on Sunday, February 26, 2023, Lance M. Fritz will leave his post as chief executive officer at the railway company, after eight years in the role, effective in 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.
Union Pacific will undertake a search for a successor.
“Enhancing and driving customer service, innovation, employee culture and sustainability”
Union Pacific stated: “Following discussions between the Board and Mr. Fritz regarding the path for identifying Union Pacific’s next CEO, in March 2022 the Board engaged a leading outside consultant and subsequently formed a task force of directors composed of each of the Board committee chairs in November 2022. The Board is seeking a CEO with a strong track record of success and expertise across safety, operational excellence, enhancing and driving customer service, innovation, employee culture and sustainability. The Board is focusing the process on highly-qualified candidates both within the industry and adjacent industries to identify a CEO capable of leading the Company for a long-term tenure. The Board expects to name a successor who will assume the position in 2023.”
“Soroban indicated it intended to move discussions to a public level”
Union Pacific further stated: “As part of the Board’s succession planning process, it has considered shareholder input and will continue to do so. The Board has been actively engaging with Soroban Capital Partners (“Soroban”) since 2017. In recent conversations, Soroban indicated it intended to move discussions to a public level. The Board decided it is in the best interests of all shareholders to provide a public update on its ongoing succession process and expected timing.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (26% of cases), implementation of a planned succession (16.2%) and the statement that the time was right for a change (9.9%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (5.7% of cases), personal reasons (3.6%) and conduct issues (2.1%). Rather rarely stated reasons are career change (2.1% of cases), health problems (1.5%), disagreement (1.2%), the desire for more time with family (0.9%) and death (0.9%). Sometimes, more than one reason was given. In 29.9% of cases, no reason was given.
Precise information regarding Lance Fritz’s future plans was not immediately available.
Share price decline since February 2022
The announcement follows a decline in Union Pacific Corp.’s share price of 21% since February 2022.
In the position of CEO since 2015
Lance Fritz became CEO of the Company in 2015.
Fritz is currently serving as the Chairman, President and Chief Executive Officer of the Company and the Railroad, and has held these roles since 2015.
Prior to that Fritz served in various roles for the Railroad, including President and Chief Operating Officer, Executive Vice President-Operations, Vice President-Labor Relations, and several other executive positions in the Railroad’s operating and marketing and sales departments.
128 words by Lance Fritz
In the news release announcing his planned departure as CEO of Union Pacific Corp., Lance Fritz received accolades, praise and thanks.
In announcing the leadership change, Lance Fritz said 128 words.
“Now is the right time”
Lance Fritz stated: “It is my honor and privilege to serve this great company. I am proud of our team and all we have built together. I’ve always said that our fundamentals for long-term success are powered by our people – our best-in-class employees and the passion they have for our customers and communities. Union Pacific has embarked on a transformative journey that will result in stronger, more consistent service for our customers, with enhanced earnings growth and value creation for our shareholders. Union Pacific has been my home for 22 years and I am confident that now is the right time for Union Pacific’s next leader to take the helm. I look forward to working with the Board as we identify our next CEO to lead the Company into the future.”
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.
36% 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 334 CEO departures in the Russell 3000 Index evaluated over the past 12 months (February 26, 2022, to February 25, 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 performance issues, time with family or other opportunities were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 36% 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 industrials sector somewhat 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 industrials sector, which includes Union Pacific Corp., the average Push-out Score over the past 12 months was 4.7, which is somewhat 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 industrials sector, 11 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 Lance Fritz’s move determined
The Push-out Score regarding Lance Fritz’s move is explained point by point in the exechange report.
exechange reached out to Union Pacific and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 10.2023 ($).