When Magna Entertainment (NASDAQ: MECA) announced the departure of CEO Michael Neuman today, the market responded by slashing the shares by more than 10%. The press release was terse:
AURORA, ON, June 22 /PRNewswire-FirstCall/ - Magna Entertainment Corp. ("MEC") (NASDAQ: MECA; TSX: MEC.A) announced today that Michael Neuman, its Chief Executive Officer, will be leaving the company effective immediately to pursue other opportunities. Frank Stronach, MEC's Chairman, will assume the position of Interim Chief Executive Officer and stated: "Michael worked very hard during his time at MEC and we wish him well in his future endeavors." Mr. Neuman stated: "I wish my colleagues at MEC well going forward and hope that the company will be successful in implementing its long-term plans."
Mr. Stronach also noted that "MEC remains focused on implementing the strategic initiatives described at our recent annual meeting, including the sale of non-core assets to further reduce debt." One of Jim Cramer's rules for investing is that you should never buy, and should usually sell, a stock on news of a top executive's unexpected departure. Neuman left "to pursue other opportunities". The implication seems to be that being CEO of Magna is not that great of an opportunity. And who can blame him? The shares have shed more than half their value since the beginning of 2006, and Neuman only joined the company in February of that year.
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