Spotlight: Second Nutrien CEO Resigns in Less Than a Year
On January 4, 2022, Nutrien announced that its recently appointed president and CEO, Mayo Schmidt, had resigned his position and was stepping down from the company’s board of directors effective immediately. Schmidt was appointed to succeed Nutrien’s outgoing CEO, Chuck Magro, in April 2021 and held the position for only eight months before his unexpected resignation. He was replaced as CEO on an interim basis by Ken Seitz while the company commenced a global search for its next CEO. Nutrien gave no reasons for Schmidt’s abrupt departure, citing legal constraints on what the company could disclose. This was notably also the case with the resignation of Magro in 2021. The short transition period and vacuum of information left room for speculation of dysfunction within Nutrien’s senior management. Within 24 hours of the announcement, the price of Nutrien shares fell by 4% on the TSX, a more significant decline than the previous 3% fall in the share price when the company changed CEOs in 2021. The rapid CEO successions also came at a major price to the company in the form of severance payments. According to Nutrien’s most recent management information circular, the company paid Magro US$18.48 million in 2021, including a US$7.98 million severance payment, while Schmidt
collected US$14.22 million, including US$4.83 million in severance, for his eight-month tenure. In addition to falling share prices and severance payments, Nutrien’s declared “global search” for a new CEO is sure to cost the company in terms of management and board distraction as well as financially. The company clarified that it will be considering both internal and external candidates in the hope of finding a permanent successor. The Nutrien case highlights the importance of carefully considering messaging regarding succession plans both before and after a CEO departure. Rapid and unexpected changes marked by board resignations, unclear succession plans and reasons that insinuate discord erode investor confidence. Characterization of a CEO departure calls for a delicate balancing act between respecting the outgoing CEO’s privacy and accurate disclosure that pre-empts speculation of a scandal. Additionally, public disclosure should be accompanied by consistent but more “user-friendly” internal messaging to employees and core stakeholders to retain their confidence that the company and its board have matters under control.
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Governance Insights 2022
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