What do you say about a CEO who arrived at a stagnant penny stock and, in just a little more than two years, drove its stock up nearly 1,500%? How do you eulogize the same man if he then proceeded to squander those gains, giving up 1,300% of his shareholders' profits in the succeeding eight months? "Goodbye," certainly, but perhaps "good riddance" is too optimistic a farewell.
After the markets had safely closed Tuesday, little Motley Fool Rule Breakers pick Force Protection (Nasdaq: FRPT) announced the imminent retirement of CEO Gordon McGilton (due out the door at the end of this month). At the same time, the board voted to replace McGilton with the company's president, Michael Moody, who will assume the twin mantles of chairman and CEO on a temporary basis.
Change is in the air
Change -- it's not just for presidential candidates anymore. Recent converts to "the Force" will no doubt be thrilled to learn that the man who built Force into a "mine-resistant, ambush-protected" (MRAP) vehicle powerhouse -- and then handed over its industry-leading position to the likes of NYSE-delisted Navistar and foreign builder BAE Systems -- is exiting stage left.
Rumors will fly that this is the prelude to a sale; that McGilton left the company because he didn't want to work for Textron (NYSE: TXT) -- which supposedly expressed interest in buying Force last summer -- or for General Dynamics (NYSE: GD), with which Force partners today. For my part, I don't see that as out of the realm of possibility. As I argued last month, Force's price-to-sales ratio now puts it in bargain-basement territory for a defense contractor, and I expect Force's peers can calculate a price-to-sales ratio at least as well as I can.
But unless the rumors are founded, Force needs to find itself a new CEO right quick. No offense to Moody, but reviewing his curriculum vitae doesn't exactly fill this Fool's heart with confidence. According to his bio on the company website, Moody has primarily worked in private businesses, and lacks experience as a public company CEO -- much less CEO of a defense contractor. Moreover, his two most responsible positions (prior to becoming Force's president) were as chief operating officer of one insurance company, and a senior VP of another. Finally, Moody was company president throughout the period of its fall from grace; I don't think the former Force president should get a "pass" on his performance just because he now wears a shiny new "CEO" badge.
Foolish takeaway
After all the bloodletting at Force, it's time for a transfusion ... or a new owner.
May the Force be with you as you read further:
