Change of Pace at PDL

Whatever you think of him, Mark McDade is out. Shares of PDL BioPharma (Nasdaq: PDLI  ) have risen more than 10% since CEO McDade announced yesterday that he would resign by the end of the year.

McDade and Third Point, a large activist shareholder of PDL stock, have conducted a war of words since March, when Third Point started calling for the company to reduce its spending and make more progress with its pipeline.

In July, the bickering escalated. Third Point made several damning allegations against McDade, which led PDL's board of directors to hire an outside team to investigate the allegations.

The results of the investigation, announced yesterday, turned up no finding of impropriety by McDade. But "given the personal and professional toll" caused by the allegations, McDade decided to give up his CEO spot and membership on the board of directors by the end of the year.

I don't buy the crybaby excuse for McDade's resignation. With many shareholders aligned against him, there was a good chance that he would have been ousted at the company's next shareholder meeting in 2008. No executive wants that on his or her resume.

Though the board cleared him of illegal or improper behavior, McDade's tenure at PDL is hardly unblemished. While McDade help the company turn around in his early years, recent years have seen repeated delays in development of its lead drugs, and spending has been more than a bit extravagant, masking PDL's earnings potential.

Shares of another Motley Fool pick, Flamel Technologies (Nasdaq: FLML  ) , soared in 2005 after its CEO was ousted following a proxy fight with several large shareholders. Since then, Flamel's new CEO hasn't produced any new partnership deals or sped up the progress of its pipeline; investors shouldn't automatically assume that times will get easier for PDL, just because a new chief executive is coming on board.

Many of the grumbles about PDL, like the slow progress on lead drug Nuvion, won't be fixed simply by finding a new CEO. But a new boss should help restore investors' confidence in the company.

No successor to McDade has been named yet, but the board of directors immediately began seeking a new CEO. For shareholders agitating for a change at PDL, it's worth noting that just getting rid of McDade is only half the battle. Finding a suitable replacement is just as important.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. Flamel Technologies is an active Motley Fool Hidden Gems pick. The Fool's disclosure policy isn't going anywhere.