Deciphering the exit memo: Exechange analyzes why CEOs actually leave

Exechange deciphers the reasons behind CEO departures.

Now you see them; now you don’t: When a CEO departs, there are seldom real facts about what happened in a company’s press release. And because company boards and communications teams rarely disclose such details—whether for legal or face-saving reasons—investors have become accustomed to being left in the dark, The Wall Street Journal reported on Aug. 13.

However, Daniel Schauber, the founder of Frankfurt, Germany-based startup Exechange, had a different reaction. The 46-year-old researcher wrote an algorithm that has put him in the forefront of “decoding” executive departures—who comes, who leaves, who wants to go, who has to go—reported on a weekly basis.

“We focus on the way a leader is leaving,” the Exechange site says, providing a unique Push-out Score, ranging from 0 to 10. A zero indicates a completely voluntary departure, and a 10, an explicit ouster.

The business news outlet gave two recent examples in which a CEO departure was rated by Exechange. In April, when New York City-based engineering firm Arconic announced that then-CEO Klaus Kleinfeld was stepping down “by mutual agreement” after he sent an unauthorized letter to an activist investor that the board decided showed poor judgment, Schauber’s formula gave his exit a maximum score of 10.

Arconic declined to comment on the score, and Kleinfeld couldn’t be reached for comment.

On the other end of the scale, CEO Rex Tillerson’s departure from Exxon Mobil to accept the position of U.S. secretary of state generated a Push-out Score of 0.

More often, the score ends up somewhere in between, suggesting some signs of pressure on an executive to go. Therein lies Schauber’s challenge—and opportunity.

“I was fascinated,” Schauber told the Journal in a recent interview. “[The announcements look] like boilerplate language, but if you look really closely at each word and how the words are weighed, each corporation has its own code. If there are deviations from that norm, there may be information there.”

For example, he told the Journal, fuzzy language such as “decided to leave the company,” or omissions, such as words of appreciation but no praise for concrete successes, add to the Push-out Score. So does quick departure timing, such as “effective next week,” or statements that don’t mention a permanent successor. If a departing CEO is under the age of 60 and no concrete plans or new job is mentioned, that also adds to the score.

And then there are the CEO departures that need absolutely no decoding. In 2013, Groupon’s then-CEO Andrew Mason announced his ouster in a staff memo. “I’ve decided that I’d like to spend more time with my family. Just kidding—I was fired today,” he wrote.