2. Boston Scientific: Waiting on a Turnaround
The biggest shock came this week, when the "turnaround specialist" hired in 2009 to turn the fortunes of the flailing medical technology company, Boston Scientific CEO Ray Elliott, announced that he's not sticking around for the turnaround he's commandeering.
The heads of Boston Scientific investors turned around on their necks and Wall Street analysts forever calling a turnaround in Boston Scientific shares must have turned to the skies this week and asked what's next from Boston Scientific?In fact, earlier this year, when Boston Scientific announced a major defibrillator recall, BMO Capital Markets analyst Joanne Wuensch asked in a research note, "What's next, locusts?" Investors voted with their feet this week after Elliott announced his departure, sending shares plunging 10%. Naturally, the company and Elliott tried to position his departure as a natural step in the company's strategic plan, more or less saying that the turnaround was in place and it made sense for Elliott to leave. Investors weren't buying it, and several analysts didn't even bother writing a research note this week on the news, knowing that no one needed this one explained to them. On a purely monetary basis, investors had reason to think Elliott simply took the money and ran. Elliott was the the second-highest paid CEO in America, behind only Oracle's Larry Ellison in 2009, raking in $33 million in compensation thanks to a hefty one-time stock award of $29 million for taking the CEO spot. Last year, his salary went back to a measly $4.9 million. On a recent conference call with investors, Elliott said, "Somewhere along the way, you have to bite the bullet and do the right stuff." Apparently, the right stuff was running off with the money and patting himself on the back for a job well done when the job was far from finished. Between the acquisitions that Elliott oversaw and the rest of the restructuring, including a 10% workforce layoff and asset divestitures, his tenure may ultimately be judged as a successful one, but that's years away, and there is one simple metric on which Elliott failed investors: Boston Scientific shares remain well below where they traded when he took over what was already an out-of-favor company. Elliott and Boston Scientific said that it's time to transition to a long-term CEO. They can say "Mission Accomplished" all they want, but investors know better: this mission was aborted, once again sending Boston Scientific shares to an EKG-like plunge.