Through the first four months of this year, 411 CEOs have announced they were leaving their positions as top dogs, according to outplacement company Challenger. The reasons for departure included the obvious ones, including retirement, scoring a better gig, and performance-based termination. What isn't so obvious is how a company will perform in the wake of a CEO's departure.
A study by FTI Consulting found that a positive stock reaction on the day the new leader is announced typically resulted in the stock outperforming the market by 19% six months later. When a stock fell on the announcement day, it subsequently underperformed the market by an average of 17% over the following six months.
So while everyone else is busy watching Yahoo! and Best Buy, here are five of 2012's newest CEOs who don't get the same exposure but have a chance to make a big difference in their companies and your portfolio.
1. Jeremy Levin -- Teva Pharmaceuticals (Nasdaq: TEVA )
Jeremy Levin ascended to the top spot at Teva last week, replacing Shlomo Yanai. Levin comes to Teva with a wealth of pharmaceutical experience -- a welcome change from Yanai, who didn't have any.
There are challenges aplenty at the world's largest generic-drug maker. Its Nasdaq ADR shares lost 21% last year, compared to an 11% gain for Bloomberg's EMEA Pharmaceuticals Index. Levin has been quiet on the company's plan going forward, saying he needs more time to study the company before issuing Teva's official strategy and guidance for 2012.
The New York Stock Exchange was closed for New Year's Day when Teva announced its plans for CEO succession, but shares rose 3.3% in Tel Aviv on the news.
2. Ryan Lance -- ConocoPhillips (NYSE: COP )
Ryan Lance took the helm of ConocoPhillips after the company spun off its refining and marketing operations two weeks ago. Fool Jacob Roche likes the new E&P-only unit's promise for expanding margins, noting that "in 2011, the E&P operations carried a profit margin of 16%, while the operations now contained in Phillips 66 only returned 13%. That's still lower than the upstream margins at ExxonMobil and Chevron, but Conoco's margins have improved significantly over the last couple [of] years, from just 8% in 2009, and are likely to continue improving as the company sells off non-core assets."
As for Lance, he takes over as top dog after serving as senior vice president for international oil and exploration. Like every other company in the industry, ConocoPhillips will focus on production of oil and natural gas liquids in North America in the near future, according to Lance. He will also maintain some of the company's policies that were in place before the spinoff, like divesting $10 billion in assets and maintaining a high dividend.
Shares fell a minuscule 0.3% when the move was announced last October.
3. Inge Thulin -- 3M (NYSE: MMM )
Inge Thulin officially took over for outgoing CEO George Buckley on Feb. 24, though Buckley is not retiring until June 1. Thulin said he plans to focus on "regional self-sufficiency" and innovation, something his predecessor was adept at encouraging at the company. In 2005, 21% of 3M's sales were generated by products less than five years old. Now that number is at 32%.
Thulin's strategy to keep the conglomerate on the cutting edge involves significant hiring across the globe, both to recruit the best talent and to replace retiring employees. The manufacturing sector is expected to be hit hard by the retirement of skilled workers in the coming years.
Shares rose 0.1% when Thulin's appointment was announced in February.
4. William Heiden -- AMAG Pharmaceuticals (Nasdaq: AMAG )
Last week, AMAG Pharmaceuticals announced that William Heiden would replace interim CEO Frank Thomas. Heiden comes to AMAG from GTC Biotherapeutics, where he was also chief executive.
Heiden inherits a company that doesn't know whether it's coming or going. Numerous business strategies have been tossed out over the past 12 months, including acquiring Allos Therapeutics. When shareholders rejected that plan, AMAG announced it was cutting costs and 25% of its positions. Then its former CEO defected. Finally, the beleaguered company hired Jefferies to help sort things out. Now that Heiden is on board, the plan going forward is to focus on increasing sales of its anemia drug.
Shares fell 6% the day the announcement was made, though the dip was likely more in reaction to AMAG's news that it was no longer pursuing a sale.
5. Simon Moutter -- New Zealand Telecom (NYSE: NZT )
Simon Moutter is scheduled to take the helm of New Zealand Telecom on Sept. 1, replacing Paul Reynolds, who is stepping down June 30 (Chris Quin will serve as interim CEO).
At first blush, Moutter is an interesting pick for Telecom, given his current role as CEO of Auckland International Airport. But Telecom fans welcome the return of the man who was formally chief operating officer at the company. Moutter helped transform Telecom a decade ago when the company expanded into the IT services realm and launched its nationwide broadband service.
Shares rose on American and New Zealand exchanges on the announcement.
Foolish takeaway
Management has a way of making or breaking a stock. Keeping a close eye on new leaders can often give investors the insight they need to make better investing decisions.
Fools interested in three more stock ideas should check out this report from Fool equity analysts: "The Future Is Made in America."
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