The CEO of the $14 billion electronics company could not talk about resigning after an internal investigation

After a four-week internal investigation at the $14 billion electronics manufacturer Jabil Inc. CEO Kenneth “Kenny” Wilson has abruptly resigned shortly after celebrating one year at the helm of one of the company’s key suppliers. AppleCisco et General motive.

When he left his role as CEO last week, Wilson agreed to a series of restrictive covenants with one highly unusual clause: He was prohibited from speaking to the media other than to say “no comment.” “, according to His separation agreement. Wilson was also required to provide the company with a written statement before officially leaving on May 18, but Jabil redacted the content of the statement to investors. In return, Jabil paid him $2 million and allowed some of his unvested equity to continue vesting. (The company redacted its disclosures about his unvested equity.)

Previous company Wilson was benched on April 15 And give him leave while it conducted an investigation “relating to company policy,” allowing him to collect his $1 million salary during that time. Jabil did not disclose details about the investigation, saying only that it did not involve the company’s financial statements. It also remained silent on the content and results of the investigation. Instead, Jabil simply announced that Wilson “ceased to serve as chief executive officer” on May 18 after the investigation was completed.

Meanwhile, Wilson’s two adult sons work for Jabil: Jordan Wilson is a business unit manager in Austin, Texas, and Adam Wilson holds the same title and works in St. Petersburg, Fla., according to LinkedIn and Jabil revelations.

Under the terms of his exit as CEO, Kenny Wilson was subject to a two-year non-compete and non-disparagement agreement, which are typical terms when a CEO and a company jointly It is implied that the CEO will resign.

But then it became unusual.

Wilson’s agreement binds him to the right to “no comment” or not to respond if he is contacted by a member of the press, and Wilson must notify Jabil general counsel Kristine Melachrino via email of any such calls. any investigation by the media within 72 hours.

The agreement states: “You will not, nor will you permit, assist or encourage others, to publish or communicate with any media representative regarding any aspect of your employment or this agreement. this agreement”. In return, Jabil agreed not to respond or to respond “no comment” about Wilson’s actions or to issue a general statement. The agreement extends to any other form of live or unrecorded communication with the media, including “deep platforms,” the agreement states.

For that, Wilson is paid $2 million, and he will keep long-term incentive awards as well as the cash value of unvested long-term equity awards scheduled to vest in 2024. (He would have forfeited equity that was scheduled to vest in 2025 and 2026.) According to Jabil 2023 shareholder reportWilson earned $1 million in salary and received a long-term equity award of $6.2 million with his promotion to CEO in April 2023. His total salary as of 2023 worth $10.2 million, and he holds unvested equity worth about $7 million, according to Jabil’s report.

Brittany McCants, a labor and employment partner at the law firm Barnes & Thornburg, explained that the $2 million payment is not considered severance; it is a single payment made in exchange for continued compliance with the restrictive covenants and the provision of an affidavit. “This payment structure along with previous disclosures referencing an investigation revealed an unfriendly separation between the executive and the company, and so the company wanted to pay to do this quickly while protecting themselves.” Luck.

Public companies typically do not formally fire CEOs or other executives “for cause” because doing so would likely have a negative impact on the company’s stock price as it could signal discord or worse, poor leadership in the C-Suite. And while it is standard for companies to avoid disclosing the results of investigations and the nature or specific reasons for the CEO’s departure following an investigation, the agreement’s extensive media coverage clause separation clearly states what Wilson is and is not allowed to say to the CEO. In her experience, the media is not typical.

“This sounds to me like they were worried about some specific discussion about the investigation or his departure,” McCants said. “They are giving very clear guidelines about what he can and cannot discuss around his employment, his departure and the investigation, which makes decisions about what should be shared. to share and what not to share is beyond his ability to judge and decide.”

Typically, companies rely solely on non-disparagement clauses in separation agreements to adequately protect themselves from representation by the departing executive. Wilson’s contract included a non-disparagement clause in addition to his press ban.

“It appears there has been some continuing disagreement or discord here and the company is focused on trying to ensure its brand and reputation are fully protected,” McCants said.

In other words, it appears that Wilson and his former employer are not on good terms.

Conversely, as departures become more amicable, companies often ensure that the character of the outgoing executive’s departure is focused on a new opportunity or that retirement is not at risk. making negative assumptions in the absence of communication about “job well done” and positive wishes. in future efforts, McCants noted.

Jabil did not comment on the request. Wilson did not respond Luckhis efforts to reach him.

Wilson’s departure earned him a score of 10 on “The Push-Out Score” from the independent research firm exchange, tracks executive departures and ranks on a scale of 0 to 10 whether the CEO or CFO was forced out or pressured to resign rather than leaving voluntarily. Exechange researcher Daniel Schauber wrote in the company’s April report that Wilson’s age, 58, plus his short tenure as CEO as well as the form and language of the announcement all contributed to the should score. “The set of all the above warning signals leaves little room for interpretation and suggests that Wilson is under pressure to leave his CEO position,” he explained.

Wilson’s departure comes as the public rates Jabil on employee review platform Indeed tends to decrease from 3.04 in 2022 to 2.92 in 2024, out of 3,900 reviews and with 5.0 being the highest. Jabil ranked below average in Indeed’s job safety survey, scoring 68 points. Overall, the company scored 3.8 out of 5.0 on both Indeed and Glassdoor employee platform. Among the categories employees can rate, including work-life balance, salary, culture and job security, management had the second lowest score, at 3.5.

An April review from a former Jabil recruiting coordinator in St. Petersburg, Fla., says it is mostly “a boys club with poor communication.” One inspector currently working at the company in Elmira, New York, said they loved the job but felt they were treated poorly. “It’s all about who you know, who you are, who you’re related to, or who you’re dating,” the employee wrote. “HR is very biased, good luck getting any help when you have any problems with co-workers or supervisors.”

However, other reviewers awarded the company five stars and said it was a great place to work with “excellent” management, good pay and benefits, and a professional workplace culture . Wilson has an 86% approval rating on Glassdoor.

His departure led to a comprehensive change at Jabil, was another refrain among the constructive criticism employees gave the company. “Formulate some realistic strategies around our vision statement. Stop randomly reorganizing in the hope of finding a savior,” wrote an employee on Comparily in a review aimed at company leadership.

Jabil appointed CFO Michael Dastoor as interim CEO during the investigation, and on May 18, the board named CEO Dastoor to replace Wilson. To replace Dastoor, the new chief financial officer is Gregory Hebard, the company’s former treasurer.

And Steven Borges, an executive who took a leave of absence from part of the company. retirement plan and signed a mutual separation agreement, returning to their roles on May 18 as executive vice president of the company’s global business units. Jabil has extended Borges’ employment by amending his original retirement agreement. That separation agreement does not include a media provision contained in Wilson’s agreement.

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