It's rarely a good sign when a CEO quits with a stock near 52-week lows. When Amarin (NASDAQ: AMRN) announced its CEO Joe Zakrzewski's "retirement" at age 50, let's just say it raises an eyebrow. Here's a guy that once stated, "If you offer me $15 a share, I am waiting. If you offer $30, $40, $100 it's a different story." Now with Amarin well under $2, he's packing his bags.
Packed his money bags and left
Zakrzewski has taken a salary and sold enough shares at a fraction of $30 to make him a multimillionaire while Amarin's results continue a cash-burning death spiral. The company has racked up more than $150 million in net losses the first three quarters of the year. Analysts expect another $40 million in losses for the fourth quarter and $110 million next year.
Amarin has been hoping for an FDA approval to expand marketing for its fish oil drug Vascepa. The odds look dim at best following a negative majority vote from an FDA advisory panel. While on the one hand Zakrzewski probably doesn't need the salary, on the other hand it doesn't seem like he is too confident in Amarin's future to be "retiring" at such a young age along with other clues.
Maybe he was forced out?
In a press release on Dec. 16, Amarin announced a "change" in leadership. It began with the appointment of John Thero, the company's current president, moving up to the CEO role. Current director Lars Ekman will move up to the chairman of the board position as the company "embarks on the next stages of its commercial growth," according to Ekman.
While Ekman did thank Zakrzewski for his service, what was missing in the press release was any word from Zakrzewski himself. There were no positive statements from him about Amarin, no publicly disclosed departure letter, no customary wink and nod to the shareholders that normally comes with a friendly departure of a still bullish CEO. In fact, in the accompanying filing with the SEC, absent was the customary statement stating there were no disagreements between the departing executive and the company on any matter regarding operations, financials controls, policies, or procedures.
The wink and nod from Best Buy's CEO
For an example, take a look at Best Buy (NYSE: BBY). When then-CEO Brian Dunn resigned, he soon made it well known that he was still quite bullish on the company. Not only did he make it clear that there were no disagreements regarding the usual list, but he also made it clear that he is very confident in Best Buy going forward. Dunn stated, "I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best." And he apparently was right. Best Buy continues to be quite profitable and is expected to earn $2.43 per share this year. When factoring in dividends, Best Buy stock is trading at record highs and is expected to grow its earnings 16.5% next year to $2.83 per share.
Take note if Zakrzewski pulls a Ruby Tuesday
It could be worse. So far at least, Zakrzewski hasn't done what ex-chairman of the board Matthew A. Drapkin of Ruby Tuesday (NYSE: RT) did. Not only did Drapkin abruptly resign with little notice, but he then proceeded to dump almost all of the shares he owned into the open market despite Ruby Tuesday sitting near 52-week lows. Ruby Tuesday, like Amarin, has a dim-looking future. Ruby Tuesday is racking up net losses, which analysts expect to continue all next year. If we learn that Zakrzewski starts aggressively selling shares like Ruby Tuesday's ex-chairman, it would be a terrible sign.
Foolish final thoughts
It's never a good sign when the ship's captain jumps off the side of the boat with little warning or explanation. Cautious Fools may want to stay on the sidelines and watch Amarin until more solid evidence surfaces that the ship is on the right course with its new captain.
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