When the CEO of a public company leaves, it's easy to measure what he or she meant to it: Watch the stock price. If it goes down, investors may be worried they lost a good manager. If it rises, they're often betting a new regime will turn things around.
Target Corp. named a new CEO Wednesday, and the retailer's stock price rose. Starbucks switched top barristas Monday night and its shares spiked 8 percent the next day during a down trading session.
Yesterday, Teva Pharmaceutical Industries Ltd.'s top U.S. exec left to take a senior post at Cardinal Health Inc.
Both companies operate in the Philadelphia area. Teva, the world's biggest generic drug maker, has its North American headquarters in North Wales and a manufacturing plant in Sellersville. Cardinal has a drug distribution center in South Jersey.
The reaction? Teva's American depositary receipts fell 4.5 percent, or $2.24, to $47.41. Cardinal shares rose 3.6 percent, or $2.12, to $60.69.
To reduce the worth of a multi-year tenure to one day's change in a stock price is obviously unfair. But like flash political polling, it does provide an in-the-moment picture of how the market views your value to an organization. George S. Barrett, CEO of Teva North America, found out yesterday that he meant $1.8 billion to Teva's market value.
In joining Ohio-based Cardinal as CEO of its Healthcare Supply Chain Services sector, Barrett has already added value to the drug distributor: It was worth $767 million more yesterday. Analysts say that Barrett, 52, was a contender to run Teva, which is based in Israel. Corey Davis at Natixis Bleichroeder Inc. said in a note Barrett was "unwilling to move to Israel" for personal reasons.
Davis also noted it was unclear why he left Teva but that "we'd surmise that he has aspirations of becoming the top dog at Cardinal."
Analysts say Teva will be in good hands with Barrett’s successor, Teva USA president and CEO William S. Marth. But when a leader has presided over a tripling in revenue to $8.4 billion, it can be a tough act to follow.
