Midstates CEO Jake Brace leaves at short notice

  • Push-out Score suggests push-out forces
  • After almost three years in the position
  • Praise and thanks for Brace
  • David Sambrooks taking over

(exechange) — Tulsa, Oklahoma, October 26, 2017 — Jake Brace, chief executive of Midstates, leaves. It is a change at short notice. As announced by Midstates Petroleum Company, Inc. in a news release published on Wednesday, October 25, 2017 and in a regulatory filing published on Thursday, October 26, 2017, Frederic F. (Jake) Brace leaves the post as Chief Executive Officer at the natural gas liquids company after almost three years in the position, effective November 01, 2017.

No company wants a CEO to flame out in the first years.

Among the 3,000 largest publicly held companies incorporated in the U.S. based on market capitalization, only 22 percent of the CEOs who departed over the past twelve months left within three years. Overall, the average tenure of those who left was 9 years, according to data compiled by exechange.

Brace’s duties are taken over by David Sambrooks, most recently Chief Executive Officer at Sabine Oil & Gas, LLC.

The fact that Brace’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.

No reason given

In the announcement, Midstates did not explicitly explain the reason for Brace’s imminent move, leaving room for speculation.

Precise information about the future plans of Brace was not immediately available.

Jake Brace will continue to serve on the Company’s Board.

Alarm signal

Generally speaking, it is often an alarm signal for stockholders when a CEO leaves the position at short notice and without an understandable explanation.

“Resign”

Midstates said: “On October 25, 2017, Frederic F. Brace notified the Board of Directors … of Midstates Petroleum Company, Inc. … of his intent to resign from his current position as President and Chief Executive Officer, effective November 1, 2017.”

“Brace did not resign … due to any disagreement”

“Mr. Brace did not resign from the position of President and Chief Executive Officer due to any disagreement with the Company or any matter relating to the Company’s operations, policies or practices, and Mr. Brace will remain on the Board,” Midstates said.

It is a phrase that may be intended to prevent false rumors. It may also fuel further speculation and raise more questions than it answers. Such a phrase should be read very carefully. The exact wording may be insightful.

Share price decline

The change follows a decline in the share price of Midstates Petroleum Company, Inc. since February 2017.

Chaired by Alan J. Carr

Midstates Petroleum Company, Inc. is chaired by Alan J. Carr.

Alan J. Carr has served as a member of the Company’s Board of Directors since March 9, 2015.

In the position of CEO since 2015

Brace has been Chief Executive Officer and President of Midstates Petroleum Company, Inc. since March 18, 2015.

Frederic F. Brace has served as the Company’s President and Chief Executive Officer since October 21, 2016 and as a member of the Company’s Board of Directors since March 9, 2015.

Brace previously served as Interim President and Chief Executive Officer from March 2015 through October 20, 2016.

Brace has over twenty years of experience in business management and board representations. He is currently Chairman and Chief Executive Officer of Beaucastel LLC and Sangfroid Advisors Ltd.

Previously, Brace worked for Niko Resources, Ltd., an oil and gas company, from August 2013 to December 2014 serving first as Senior Advisor and then as President of the company.

From 1988 to 2008, Brace worked at the UAL Corporation (now United Continental Holdings, Inc.), the parent company of United Airlines, Inc. and Continental Airlines, Inc., where he served as Executive Vice President and Chief Financial Officer of UAL Corporation and United Airlines, Inc. from 2002 to 2008.

From 2012 to August 2013 Brace worked as an independent consultant. Brace is currently a member of the board of directors of Anixter International and iHeartMedia, Inc. and has previously served on the board of numerous public and private companies.

He received his BS in Industrial Engineering from the University of Michigan in 1980 and his MBA with a specialization in finance from the University of Chicago Graduate School of Business in 1982.

On August 25, 2017, Midstates had announced “that the Board of Directors has entered into an amendment to its executive employment agreement with Frederic F. (Jake) Brace, Midstates’ current President and Chief Executive Officer. The amendment extends the term of the agreement from its current termination date of October 21, 2017 until April 21, 2018 and revises the duties of Mr. Brace to include service in a transitional capacity following the appointment by the Company of a replacement President and Chief Executive Officer.”

On August 25, 2017, Alan Carr, Chairman of the Board of Midstates, had commented: “Jake has been and continues to be a strong leader. His hard work and commitment during his time at Midstates has been instrumental to the Board. Thanks in part to Jake’s efforts, Midstates is a significantly stronger company. We appreciate Jake’s assistance as we transition the Company to a longer-term leadership profile.”

Push-out Score suggests push-out forces

It is not completely certain what forces eventually triggered Jake Brace’s imminent move.

The Push-out Score™ determined by exechange suggests that push-out forces may have contributed to the management change.

Read the full story in the exechange report 44.2017 ($).