It’s understandable that investors be concerned when a CEO steps down from their position. On Wednesday, two major Canadian companies announced the departure of their head honchos -- Shoppers Drug Mart Corp. and Uranium One Inc.
In the case of Shoppers, board of directors chair David Williams replaces Jürgen Schreiber on an interim basis. The board will start a global search for a new CEO, while Mr. Schreiber is pursuing a private equity opportunity outside of North America.
While Mr. Williams has served on the drug store chain’s board since 2003 and was also CFO at Loblaw Cos. between 1992 and 1998, the change could worry some shareholders.
The departure of a CEO during a period of earnings volatility could casue some investors to question Shoppers’ current strategy and outlook, UBS analyst Vishal Shreedhar said in a note to clients.
"Many shareholders invested in Shoppers because of their confidence in Mr. Schreiber’s ability to return the company to consistent growth," the analyst wrote.
But despite the heightened short-term investor concern, Mr. Shreedhar is confident that Shoppers shares will ultimately be driven by earnings. The company reports first quarter 2011 earnings on February 10 and the analyst thinks it could provide a favourable outlook.
At Uranium One, which is controlled by Russian state-owned group ARMZ, Jean Nortier resigned as CEO and Chris Sattler takes over.
While admitting that optics are frequently dented when a CEO resigns unexpectedly, Raymond James analyst Bart Joworski said he was cautious of this possibility several months ago as Uranium One moved ahead with the ARMZ deal. Nonetheless, he considers Mr. Sattler well suited for the new position and more than capable to lead the company.
The analyst did downgrade his rating on Uranium One to Market Perform from Outperform to reflect recent share price appreciation.
Mr. Sattler, who joined the company in 2006 and has served as vice president of corporate development and investor relations since 2009, gets his new duties on February 1 and will join the board.
Mr. Nortier will remain a member of the board, but returned to South Africa with his family for personal reasons.
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