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Editor’s Note: On August 21, 2023, Ann Fandozzi, the former CEO of RB Global, expressed her disagreement in a letter to RB shareholders that she did not submit her resignation from the company.
Most executive departures are fairly routine, at least to the outside world. Even the sudden departures are related to the executive “wanting to spend more time with family”, leaving for another company, etc.
Every once in a while we come across a rather strange set of circumstances surrounding a departure. There was one departure where a security software company claimed that an executive took a sabbatical after working for 15 years at the company. Apparently the executive enjoyed traveling and cycling so much that she decided to not return to work. Glancing at her LinkedIn profile, it appears that she is still on sabbatical.
This week’s departure at the car auctioneer Ritchie Bros wasn’t quite as amusing but is up there in terms of drama. Not only did the CEO leave after disagreements over her pay package, the CFO was also terminated at the same time. In fact the resignation part is also in question. More on that later.
Welcome to edition 53 of C-Suite Transitions, a weekly series on InsideArbitrage that tracks appointments and departures at publicly traded companies during the prior week. We highlight five appointments and departures each week by picking the largest companies from the full list of management changes.
Sudden Departures
RB Global (RBA)
RB Global, formerly Ritchie Bros. is a global industrial auctioneer and asset management company that specializes in facilitating the buying and selling of used heavy equipment, machinery, trucks, and other assets through both live and online auctions.
The company’s marketplace brands include:
Ritchie Bros., the largest auctioneer of commercial assets and automobiles with online bidding, and
IAA, a top worldwide digital marketplace linking automotive buyers and sellers.
RB Global’s portfolio of brands also includes:
CEO Ann Fandozzi
According to an 8k filed on August 2, 2023, 
Ann Fandozzi informed the Board of Directors on July 31, 2023, of her intention to resign from her position as the company’s Chief Executive Officer, due to a disagreement with the company about her compensation as Chief Executive Officer. The Board states that it acknowledged her verbal resignation and interpreted her subsequent actions as confirmation of her decision to resign, and also added that Ms. Fandozzi disputes having submitted her resignation.
RB Global has additionally requested her resignation as a Director. Unless Ms. Fandozzi tenders the requested resignation, she will continue to hold her position as a Director on the Board.
Factors Leading to Executive Departures
RB Global clarified that the departures of Ms. Fandozzi and Mr. Jacobs are not connected to the company’s performance, financial reporting, or operational results.
The changes follow extensive negotiations with Ms. Fandozzi regarding an appropriate executive compensation structure. In the course of these discussions, Ms. Fandozzi required that, in order for her to continue as CEO, the Board needed to approve a front-loaded compensation program that would bring forward 5 years of equity compensation.
The Board unanimously determined that such structure and the magnitude of the associated payout reaches far beyond peer group benchmarks, is out of step with market standards and is not in the best interests of the Company or RB Global shareholders. Although the Board attempted to work with Ms. Fandozzi in good faith on this matter, Ms. Fandozzi was unwilling to accept any pay package that was not front-loaded and informed the Board of her decision to resign.
Bloomberg reported that Ms. Fandozzi, in response, said, “My focus has been on sustaining momentum while solidifying an all-equity, at-risk incentive program to align management with long-term performance and shareholder value. She added, “Rather than respond to misrepresentations and speculate on motivations today, I just want to thank the employees, customers, and shareholders who placed their trust in me – they are who matters.”
Ann Fandozzi joined Ritchie Bros in January 2020, three months before the world shut down due to the pandemic. Ms. Fandozzi orchestrated a major transformation, steering the company’s evolution from a 60-year-old auctioneer into a global marketplace for insights, services, and transaction solutions. Ms. Fandozzi transitioned Ritchie Bros. entirely to online bidding while maintaining the necessary liquidity for their businesses. This shift yielded a favorable outcome, evident through a remarkable surge in registered bidders, and marked the initial step in a sequence of strategic transformations under Ms. Fandozzi’s reign. In addition, the company also strategically acquired Rouse Services, a team of data intelligence experts, and SmartEquip, a parts procurement business, in November 2022.
CEO Jim Kessler
On August 1, 2023, the Board appointed Jim Kessler as the company’s Chief Executive Officer and a member of the company’s Board, effective immediately.
In 2020, Mr. Kessler assumed the role of Chief Operating Officer at RB Global, and he further advanced to the position of President and Chief Operating Officer in 2021. He played a significant role in the due diligence process for the IAA, Inc. acquisition and has been leading the ongoing implementation of initiatives aimed at achieving cost savings and driving revenue growth in connection with the acquisition.
Annual compensation for Mr. Kessler includes an annual base salary of $850,000 and an annual bonus opportunity with a target amount equal to 125% of his base salary. His compensation also includes a very generous long-term incentive grant with a target amount equal to 1,385% of his base salary, consisting of 50% of performance share units based on target performance levels, 25% of restricted stock units, and 25% of stock options.
CFO Eric Jacobs Termination
On August 1, 2023, RB Global also announced that Eric Jacobs was terminated from his position as the company’s Chief Financial Officer. The company added that the separation qualifies as a termination without cause under Mr. Jacobs’ employment agreement.
The Board appointed Megan Cash as Principal Finance and Accounting Officer, with immediate effect. Prior to this role, Ms. Cash had been designated as Vice President of Corporate Finance in July 2018 and later promoted to the position of Senior Vice President of Global Control & Corporate Finance in 2020.
The Board announced its intention to initiate a search for a permanent Chief Financial Officer, through an executive search firm.
According to Bloomberg, Mr. Jacobs, the former CFO, said he didn’t resign and declined to comment further.
Ritchie Bros. Acquisition of IAA
IAA (Insurance Auto Auctions) a digital marketplace for vehicle buyers and seller, was the salvage auction business unit of KAR Auction Services (KAR). The merger of IAA with Ritchie Bros. was led by Ann Fandozzi.
On November 7, 2022, IAA announced that it entered into a definitive agreement with Ritchie Bros. Auctioneers, under which it will be acquired by Ritchie Bros. for approximately $7.3 billion including the assumption of $1.0 billion of net debt in a cash plus stock deal.
46% of shareholders voted against the deal. In response to shareholders’ objections to the IAA transaction the previous year, Ms. Fandozzi collaborated with Starboard to effectively navigate the completion of the deal. Institutional Shareholder Services Inc. and Glass Lewis & Co., two proxy consultants, advised investors to reject the cash-and-stock deal due to potential risks including a lag in IAA’s performance and a drop in stock price since the bid was announced. Ritchie Bros. narrowly won shareholder approval for its acquisition of IAA and invited activist investor Jeffrey Smith of Starboard Value to join its board.
On March 20, 2023, Ritchie Bros. Auctioneers announced that it had completed the IAA acquisition. Under terms of the transaction, IAA shareholders received $12.80 per share in cash and 0.5252 common shares of Ritchie Bros for each share of IAA common stock. Ritchie Bros shareholders hold 62.8% of the combined company and IAA stockholders own the rest.
RB Global Insiders Purchase $2.6M Worth of Stock
The largest single insider purchase ever was made by former CEO Ann Fandozzi who purchased 18,522 shares at an average price of $54.06 totaling $1 million. Director Erik Olsson also bought 2,000 shares at an average price of $52.85 totaling $105,700.
Valuation
Q2 2023 Results (Investor Presentation)
Conclusion
These executive departures at RBA come at a time when used car prices are starting to cool off and the stock is trading at a premium valuation. The company looks ripe for a deep dive on the short side.
Appointments
1. Elevance Health (ELV): $460.33
On August 8, 2023, Elevance Health announced that Mark Kaye has been named Executive Vice President and Chief Financial Officer effective November 1, 2023.
Mr. Kaye will commence employment with the company on September 6, 2023, as CFO Designate prior to assuming the CFO position.
| MarketCap: $108.48B | Avg. Daily Volume (30 days): 1,463,936 | Revenue (TTM): $165.72B |
| Net Income Margin (TTM): 3.89% | ROE (TTM): 17.43% | Net Cash: $12.26B |
| P/E: 17.17 | Forward P/E: 14.04 | EV/EBIDTA (TTM):11.74 |
| P/S (TTM): 0.67 | P/B (TTM): 2.85 | 52 Week Range:$412 – $544.68 |
2. Tesla (TSLA): $242.19
As of August 4, 2023, Tesla appointed Vaibhav Taneja as Chief Financial Officer in addition to his current role as Chief Accounting Officer, to succeed Zachary Kirkhorn.
| MarketCap: $766.31B | Avg. Daily Volume (30 days): 113,312,119 | Revenue (TTM): $94.03B |
| Net Income Margin (TTM): 12.97% | ROE (TTM): 27.14% | Net Cash: $18.32B |
| P/E: 68.88 | Forward P/E: 72.46 | EV/EBIDTA (TTM): 44.66 |
| P/S (TTM): 9.23 | P/B (TTM): 15.50 | 52 Week Range: $101.81 – $314.67 |
3. AMGEN (AMGN): $259.32
On August 1, 2023, the Board of Directors of Amgen appointed Matthew C. Busch to serve as Finance and Chief Accounting Officer, effective August 14, 2023.
| MarketCap: $138.71B | Avg. Daily Volume (30 days): 2,928,589 | Revenue (TTM): $26.58B |
| Net Income Margin (TTM): 30.02% | ROE (TTM): 173.46% | Net Debt: $27.29B |
| P/E: 17.46 | Forward P/E: 15.02 | EV/EBIDTA (TTM): 12.06 |
| P/S (TTM): 5.27 | P/B (TTM): 20.57 | 52 Week Range: $211.71 – $286.63 |
4. RingCentral (RNG): $29.71
On August 7, 2023, RingCentral announced that the company has appointed Tarek Robbiati, a member of the Company’s board of directors to succeed Vladimir Shmunis as Chief Executive Officer effective August 28, 2023.
| MarketCap: $2.81B | Avg. Daily Volume (30 days): 1,701,426 | Revenue (TTM): $2.11B |
| Net Income Margin (TTM): -30.59% | ROE (TTM): N/A | Net Debt: $1.18B |
| P/E: -4.41 | Forward P/E: 9.84 | EV/EBIDTA (TTM): 488.68 |
| P/S (TTM): 1.44 | P/B (TTM): N/A | 52 Week Range: $25.32 – $54.76 |
5. Moody`s Corp. (MCO): $337.78
On August 2, 2023, Moody’s Corporation named its Chief Accounting Officer and Controller, Caroline Sullivan, to the additional position of interim Chief Financial Officer.
| MarketCap: $61.97B | Avg. Daily Volume (30 days): 861,122 | Revenue (TTM): $5.53B |
| Net Income Margin (TTM): 25.81% | ROE (TTM): 49.28% | Net Debt: $5.57B |
| P/E: 43.56 | Forward P/E: 35.46 | EV/EBIDTA (TTM): 29.56 |
| P/S (TTM): 11.25 | P/B (TTM): 19.71 | 52 Week Range: $227.82 – $363.19 |
1. Amicus Therapeutics (FOLD): $13.69
Amicus Therapeutics announced that Daphne Quimi, Chief Financial Officer, notified the company on August 3, 2023, that she intends to retire before the end of 2023.
| MarketCap: $3.93B | Avg. Daily Volume (30 days): 2,861,207 | Revenue (TTM): $350.56M |
| Net Income Margin (TTM): -52.86% | ROE (TTM): -130.04% | Net Debt: $184.9M |
| P/E: -21.42 | Forward P/E: N/A | EV/EBIDTA (TTM): -33.54 |
| P/S (TTM): 11.50 | P/B (TTM): 35.65 | 52 Week Range: $9.10 – $13.87 |
2. Elevance Health (ELV): $460.33
On August 8, 2023, Elevance Health announced John Gallina, who, after nearly thirty years of dedicated services to the company, has decided to retire as CFO effective September 6, 2023.
| MarketCap: $108.48B | Avg. Daily Volume (30 days): 1,463,936 | Revenue (TTM): $165.72B |
| Net Income Margin (TTM): 3.89% | ROE (TTM): 17.43% | Net Cash: $12.26B |
| P/E: 17.17 | Forward P/E: 14.04 | EV/EBIDTA (TTM):11.74 |
| P/S (TTM): 0.67 | P/B (TTM): 2.85 | 52 Week Range:$412 – $544.68 |
3. RingCentral (RNG): $29.71
On August 7, 2023, RingCentral announced that Chief Executive Officer Vladimir Shmunis steps down effective August 28, 2023.
| MarketCap: $2.81B | Avg. Daily Volume (30 days): 1,701,426 | Revenue (TTM): $2.11B |
| Net Income Margin (TTM): -30.59% | ROE (TTM): N/A | Net Debt: $1.18B |
| P/E: -4.41 | Forward P/E: 9.84 | EV/EBIDTA (TTM): 488.68 |
| P/S (TTM): 1.44 | P/B (TTM): N/A | 52 Week Range: $25.32 – $54.76 |
4. Tesla (TSLA): $242.19
As of August 4, 2023, Tesla announced Chief Financial Officer Zachary Kirkhorn resigns after a thirteen-year tenure with the company.
| MarketCap: $766.31B | Avg. Daily Volume (30 days): 113,312,119 | Revenue (TTM): $94.03B |
| Net Income Margin (TTM): 12.97% | ROE (TTM): 27.14% | Net Cash: $18.32B |
| P/E: 68.88 | Forward P/E: 72.46 | EV/EBIDTA (TTM): 44.66 |
| P/S (TTM): 9.23 | P/B (TTM): 15.50 | 52 Week Range: $101.81 – $314.67 |
5. Moody`s Corp. (MCO): $337.78
On August 2, 2023, Mark Kaye submitted his resignation as the Executive Vice President and Chief Financial Officer of Moody’s Corporation effective as of September 5, 2023.
| MarketCap: $61.97B | Avg. Daily Volume (30 days): 861,122 | Revenue (TTM): $5.53B |
| Net Income Margin (TTM): 25.81% | ROE (TTM): 49.28% | Net Debt: $5.57B |
| P/E: 43.56 | Forward P/E: 35.46 | EV/EBIDTA (TTM): 29.56 |
| P/S (TTM): 11.25 | P/B (TTM): 19.71 | 52 Week Range: $227.82 – $363.19 |
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