So how is the Push-out Score™ actually determined? 10 real, anonymized examples:
Example 1
On April 7, Company X publishes a corporate announcement consisting of four pages (1. Form: appropriate, 0 points).
In warm words, including accolades for concrete successes (2. Language: appropriate, 0 points),
the Chairman of Company X announces that its CEO, age 65 (3. Age: appropriate, 0 points),
“has shared his intention to retire as Chief Executive Officer of the Company on October 31” (4. Notice period: more than six months, appropriate, 0 points).
The CEO has been on the job for 10 years (5. Tenure: appropriate, 0 points).
The share price has more than tripled over the past eight years and recently reached an all-time high (6. Share price development: strong, 0 points).
In the announcement, the Chairman explains the management change as follows: “This planned succession will provide continuity.” (7. Official reason given: understandable, 0 points).
Company X marks its 200th anniversary this year and has been successful and free of scandals in the short, medium and long term (8. Circumstances: good, 0 points).
Company X appoints the long-standing Chief Operating Officer, age 45, as the successor, effective November 1, to correspond with the start of the new fiscal year (9. Succession: sign of continuity, 0 points).
Push-out Score: 0
It is not at all likely that the CEO was pushed out or felt pressure to leave the post. This is apparently a carefully planned generational change.
Example 2
On January 31, Company X publishes a corporate announcement with the title “Company X Reports Fourth Quarter and Full Year Results; Announces Outlook.” Buried on page 3 in the 11-page announcement (1. Form: not appropriate, 1 point),
Company X says in icy words (2. Language: not appropriate, 1 point)
that the CFO, age 55 (3. Age: not appropriate, 1 point),
“has decided to leave the company,” effective in three days (4. Notice period: not appropriate, 1 point).
Information about the future plans of the manager is not immediately available. The outgoing CFO has been on the job for 12 months (5. Tenure: not appropriate, 1 point).
12 months ago, the share price was close to its all-time high. Over the past 12 months, the share price has declined sharply (6. Share price development: poor, 1 point).
In the announcement, the company explains the management change as follows: The CFO “has decided to leave the company due to personal reasons” (7. Official reason given: not understandable, 1 point).
In the announcement, Company X releases weaker-than-expected fourth-quarter results and cuts its outlook (8. Circumstances: bad, 1 point).
A permanent successor is not available. The current Senior Vice President, Corporate Finance, is named acting CFO (9. Succession: bumpy: 1 point).
Push-out Score: 9
It is extremely likely that the CFO was pushed out. There is every indication that the manager was ousted due to bad performance, but it is ultimately not provable.
Example 3
On February 2, Company X publishes a corporate announcement with the title “Y to Retire as CEO of Company X,” consisting of nine sentences (1. Form: still appropriate, 0 points).
In relatively warm words (2. Language: still appropriate, 0 points),
the Company announces that the CEO, age 54 (3. Age: not appropriate, 1 point),
“plans to retire,” effective in the next year (4. Notice period: around one year, very long and potentially causing a lame-duck problem, still appropriate, 0 points).
Information about the future plans of the manager is not immediately available. The outgoing CEO has been on the job for 17 years (5. Tenure: appropriate, 0 points).
The share price, which had reached its all-time high two years ago, declined by around 50% in the last two years and is lagging behind the relevant benchmark (6. Share price development: not appropriate, 1 point).
In the announcement, the Founder and Chairman of Company X says that “the Board has been discussing [the outgoing CEO’s] plans for over a year,” whereas the outgoing CEO says that he has “advised the Board of Directors of [his] intentions a year in advance to assure a very smooth transition.” The Company does not explicitly explain the reason for the planned management change (7. Official reason given: none, 1 point).
Company X has been successful in the long and medium term, but the once-rapid growth has leveled off recently. Revenue declined as Company X faces increasing competition from smaller companies (8. Circumstances: bad, 1 point).
Company X says that the Board of Directors has created a search committee and retained an executive search firm “in identifying and evaluating the best candidates” to succeed the outgoing CEO (9. Succession: unclear, 1 point).
Push-out Score: 5
It is pretty likely that the manager feels some pressure to leave the post due to recent poor performance. The information in the announcement seems somewhat inconsistent and partly contradictory.
Example 4
Company X announces that its CFO has “resigned because of matters regarding personal conduct unrelated to the operations or financial statements of the Company.”
Push-out Score: 10
It is evident that the CFO was pushed out due to bad behavior. Formally, it is a resignation.
Example 5
Company X announces that the CEO “has informed the Board of Directors of his intention to resign.” The management change is explained as follows. The CEO says: “I believe this is the right decision to make for the company and all its stakeholders. Without wholehearted shareholder support for my continued leadership, a protracted period of uncertainty could undermine the progress we have made and damage the interests of our policyholders, employees, regulators, debtholders, and shareholders.”
Push-out Score: 10
It is evident that the CEO was pushed out by shareholders. Formally, it is a resignation.
Example 6
Company X announces the departure of the CEO. The management change is explained as follows. Company X says: “The decision of the Board to seek Mr. Y’s resignation was a result of Mr. Y’s request that the Board commence a process to sell the Company in a going-private transaction. While the Board, consistent with its fiduciary duties, will review and assess any bona fide proposal, the Board recently conducted a review of the Company’s prospects and opportunities and disagrees with Mr. Y’s views on this matter. Rather, the Board believes that unrealized potential for the Company’s prospects can be achieved under new leadership and is confident in the Company’s standalone opportunities.”
Push-out Score: 10
It is evident that the CEO was pushed out by the Board due to differing views. Formally, it is a resignation.
Example 7
Company X announces that the CEO is “standing down.” The management change is explained as follows. The departing CEO says: “I made a mistake which I greatly regret and I am now paying the consequences. I realize that my conduct in my dealings with a sales partner was not in line with [the Company’s] values.”
Push-out Score: 10
It is evident that the CEO felt pressure to leave the post due to bad behavior.
Example 8
Company X announces that the CEO was “terminated for cause.” A reason is not given.
Push-out Score: 10
It is evident that the CEO was pushed out. The precise circumstances remain concealed.
Example 9
On January 18, Company X publishes a corporate announcement consisting of two pages (1. Form: appropriate, 0 points).
In warm words, including accolades for concrete successes, (2. Language: appropriate, 0 points),
the company announces that its CEO, age 54 (3. Age: appropriate; see below “7. Official reason given,” 0 points),
“has decided not to renew his current contract” and will “leave the company at his own request as of April 30” (4. Notice period: more than three months, appropriate, 0 points).
The CEO has been on the job for eight years (5. Tenure: appropriate, 0 points).
The share price has more than doubled over the past eight years, outperformed the relevant benchmark and recently reached an all-time high (6. Share price development: strong, 0 points).
In the announcement, Company X gives no reason for the management change. But on the same date, Company Y announces that it has appointed the outgoing CEO of Company X as future CEO, effective October 1, while the incumbent CEO of Company Y “has agreed to relinquish” the CEO position effective September 30, prior to the expiry of the current contract. In terms of revenues, number of employees and market capitalization, Company Y is bigger than Company X (7. Official reason given: none, but the reason for the change is an obvious career rise, 0 points).
Company X has been particularly successful in the past eight years (8. Circumstances: good, 0 points).
Company X appoints a long-standing member of the management board as the successor, effective May 1, stressing that the new CEO is a “strong successor” (9. Succession: sign of continuity, 0 points).
Push-out Score: 0
It is not at all likely that the manager was pushed out or felt pressure to leave the post. This is, by all indications, a carefully designed career rise.
Example 10
On November 19, Company X publishes a corporate announcement with the title “Company X Names Y President.” Buried at the end of the announcement (1. Form: not appropriate, 1 point),
Company X says in icy words (2. Language: not appropriate, 1 point)
that its co-president, age 50 (3. Age: not appropriate, 1 point),
“will be leaving” the company. Information about the future plans of the manager is not immediately available. A date for the departure is not explicitly given, but the new president, who was most recently also co-president, has been promoted to be sole president, effective immediately (4. Notice period: not appropriate, 1 point).
The outgoing co-president has been on the job for three years (5. Tenure: appropriate, 0 points).
Eight months ago, the share price was at its all-time high. Over the past eight months, the share price has declined sharply (6. Share price development: poor, 1 point).
In the announcement, Company X, namely the CEO, praises the new sole president to the skies — whereas there is obviously no need to waste words on the outgoing co-president. An explicit reason for the management change is not given (7. Official reason given: none, 1 point).
Company X has been in the midst of a cost-cutting initiative and seen pressure on its business. Four months ago, Company X had announced plans to cut 15 percent of its workforce (8. Circumstances: bad, 1 point).
A successor is not needed. Company X eliminates the dual president role. (9. Succession: none, position is eliminated: 1 point).
Push-out Score: 8
It is highly likely that the manager felt pressure to leave the post to escape an impending demotion.
(Obviously, the outgoing manager has looked for alternatives in time: On November 20, Company Y appoints the former co-president of Company X as president of a newly created division.)