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Catalyst Health Solutions Loses Third General Counsel Amid Recent History of Leadership Turnover

Submitted by Andy Buch on Fri, 01/27/2012 - 14:27

On 25-Jan-12, Catalyst Health Solutions (NASDAQ: CHSI) announced the resignation of General Counsel Bruce Metge, effective 1-Mar-12. He will be replaced by Benjamin Preston on that date. Preston will be the third individual to fulfill this role since 2008. Elsewhere in the executive suite, CHSI has seen two COOs and five CFOs (one of whom has served twice) in the past five years. Additionally, in Dec-11, Chairman Edward Civera resigned and was replaced as such by CEO David Blair, son of former Chairman Thomas Blair.

Below is a detailed breakdown of the above activity in the executive suite:

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Newport Corp. Completes Acquisition of ILX - Caps $269 Million of Acquisitions Over Last 6 Months

Submitted by Andy Buch on Wed, 01/18/2012 - 12:54

On 17-Jan-12, Newport Corporation (NASDAQ: NEWP) announced its completion of ILX Lightwave Corporation (ILX). ILX was purchased for $9.3 million in cash and is the third acquisition for NEWP since 29-Jul-11. Newport’s Dec-11 acquisition of Ophir Optronics was its largest at $242 million. Before its 29-Jul-11 purchase of High Q Technologies for $17 million, NEWP’s only other acquisition in the past five years was that of Oclaro, Inc.’s “New Focus” business for $14 million in Jul-09.

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Acacia Research Separates the Roles of Chairman and CEO - A Positive Move for a Company with Management and Board Stability

Submitted by Andy Buch on Thu, 01/12/2012 - 13:59

Effective today, the board at Acacia Research Corporation (NASDAQ: ACTG) appointed Robert Harris, age 53, as Executive Chairman and appointed Paul Ryan, age 66, as President & CEO. Ryan had been serving as Chairman since 2000 and CEO since 1997, while Harris has served as President since 2000.

ACTG has done a notable job of maintaining stability in the executive suite and on the board. The CEO and CFO have been the same people for more than a decade. In the board room, there have only been 3 director departures since 2007.

Corporate governance best practices dictate the separation of the positions of CEO and chairman. The CEO represents management while the chairman represents all shareholders. When the CEO and chairman are one and the same person, there is a risk that the balance of power between management and shareholders may be negatively affected.

Here is the press release announcing the change.

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The Pentagon is Cutting Hundreds of Billions - Here are Some of the Companies at Risk

Submitted by Andy Buch on Thu, 01/05/2012 - 09:37

The Pentagon will finally announce its long-anticipated military spending cuts today (MarketWatch.com article here). In light of that, it might be prudent to revisit some companies that attribute considerable portions of their revenue to the Department of Defense (“DoD”) and/or related government agencies. Here are disclosures taken from the SEC filings of six military contractors and one for-profit education company (in alphabetical order):

ACM: 22% from U.S federal government in fiscal 2011 (10-K filed 21-Nov-11)

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Kodak Loses Third Director This Year - Sixth Since 2007

Submitted by Andy Buch on Wed, 12/28/2011 - 16:20

On 21-Dec-11, directors Adam Clammer (age 40) and Herald Chen (age 41) notified the board of  Eastman Kodak Company (NYSE: EK) of their resignations. No explanation was given. These departures make for a total of 6 since the 2007 annual meeting and 3 in 2011. Clammer and Chen were elected to the board in 2009.

These are the other departures that have taken place since 2007:

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United Rentals' Acquisition of RSC Holdings Only Latest in a History of Risk Factors

Submitted by Andy Buch on Mon, 12/19/2011 - 17:35

On 16-Dec-11, United Rentals (NYSE: URI) entered an agreement to acquire RSC Holdings (NYSE: RRR) for an enterprise value of $4.2 billion, including net debt of $2.3 billion. The potential risks and challenges associated with this acquisition take on a different context when viewed through the history of issues that URI has and does face.

As of 28-Sep-11, in response to a Freedom of Information Act request, the SEC confirmed that URI was somehow involved in SEC investigative activity. Additionally, URI has recorded $119 million in restructuring and asset impairment charges since 2008 as well as taking a $1.15 billion goodwill impairment charge in 2008. The goodwill impairment points toward the company's previous acquisitions not living up to expectations while the restructuring charges could be indicative of poor capital allocation.

The executive suite and board have not been particularly stable. There have been 2 CEOs, 2 CFOs, 2 principal accounting officers, and 6 directors since 2007.

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Gartner Inc. Loses Sixth Director since 2007

Submitted by Andy Buch on Mon, 12/19/2011 - 15:12

Gartner Inc. (NYSE: IT) has disclosed the departure of its second director since this summer and its sixth director from the board since June 2007.

On 15-Dec-11, Jeffrey Ubben notified the IT board of his intention to resign effective immediately. He joins Russell Fradin (departed 29-Jul-11) as the second director to leave this year. Both left immediately after their respective announcements. While Fradin (then age 55) cited his new role as CEO of a different company, Ubben (age 49) offered no explanation for his departure. Ubben and Fradin represented two-thirds of the compensation committee. Collectively, the 6 departed directors spent 37 years representing IT shareholders. Those 37 years represent the loss of a lot of experiencing interacting with the company and its management.

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FleetCor's Latest Acquisition Bigger Than Total of Deals Done Since 2007

Submitted by Andy Buch on Wed, 12/14/2011 - 10:29

FleetCor Technologies Inc. (NYSE: FLT) spent almost as much money in yesterday's acquisition of AllStar Business Solutions, Ltd. as it has over the course of all its acquisitions in the past 5 years. 

On 13-Dec-11, FLT ($2.38 bn market cap) announced the consummation of a $304 million purchase of AllStar Business Solutions Ltd.  Since 2007, the company has completed at least 8 acquisitions totaling more than $347 million. Given the context of the past five years, yesterday's single expenditure of $304 million is a lot to digest. Considering most acquisitions fail, investors with an interest in this name will do well to stay especially vigilant going forward.

Here is a link to the company's press release, detailing the purchase.

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How Much Tuition Would You Pay CECO for a 1-in-4 Shot at a 2-in-3 Shot that You’ll End up with a Job in Your Field?

Submitted by Andy Buch on Fri, 12/09/2011 - 13:35

In its most recent 10-Q filed 9-Nov-11, CECO disclosed that only 13 of its 49 ACICS-accredited schools in the Health Education & Design segment met the ACICS placement rate requirement of 65% for the 2010 - 2011 reporting period. In an 8-K filed 21-Nov-11, CECO disclosed an upcoming December meeting where it will try to convince ACICS that its accreditation should not be suspended, given its placement numbers.

By CECO’s own reporting, only 26.5% of its Health Education & Design schools were placing at least 65% of their graduates into meaningful employment. This gives the prospective student a 1-in-4 shot (13/49) at a 2-in-3 shot (65%) of ending up with a job in their field (or a related field).

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CECO's Ex-CEO Picks Up $5.3 Million in Severance Pay - CECO on its Fourth CEO since Sep-06

Submitted by Andy Buch on Wed, 11/30/2011 - 13:36

In an amended 8-K filed yesterday, CECO reported that previous CEO Gary McCullough (who resigned on 31-Oct-11) would receive $5.3 million in severance pay and benefits. During McCullough's tenure as CEO from 2-Apr-07 through 31-Oct-11, the stock fell from $30.67 to $16.13, a drop of approximately 47%. Following the announcement of McCullough's departure on 1-Nov-11, the stock fell to the $8 range the next day.

CECO is on its fourth CEO since Sep-06, including an interim CEO. In Sep-06, John Larson (CEO since Jan-94) stepped down, but continued to serve as Chairman. Lead Director Robert Dowdell served as interim CEO until Mar-07 when McCullough was named CEO. Following McCullough's resignation, Chairman Steven Lesnick  was named CEO. According to the company, it is looking for a new CEO although a deadline has not been set.

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