A stunning choice
Even before Tandem released earnings we anticipated solid results and we weren’t disappointed. However as good as the results are, they are being overshadowed by the news that after 12 years CEO Kim Blickenstaff will transition to the “newly-created position of Executive Chairman of the Board of Directors. John F. Sheridan will succeed Mr. Blickenstaff, assuming the role of President and CEO effective March 1, 2019. Mr. Sheridan has served as the Company’s Executive Vice President and Chief Operating Officer since April 2013. “
While we have known for some time that Kim was being replaced what we did not anticipate was John Sheridan assuming the position of CEO. Not that John cannot handle the job because of something else we have known for some time and was disclosed in an 8-K also released today;
Mr. Sheridan and Leigh A. Vosseller, who is currently the Company’s Executive Vice President, Chief Financial Officer and Treasurer, are involved in a personal relationship. Ms. Vosseller will report directly to Mr. Sheridan in his new position as the Company’s President and Chief Executive Officer. The Board is informed of the relationship and due to the direct reporting arrangement, appropriate actions have been taken to ensure compliance with Company policies and procedures. Mr. Sheridan and Ms. Vosseller will not be involved in setting compensation or benefits for one another, which will continue to be determined by the Company’s Compensation Committee of the Board (the “Compensation Committee”). In addition, the Company’s Audit Committee of the Board intends to consider whether additional internal disclosure controls and procedures are appropriate in light of the circumstances. Other than the aforementioned, there are no family relationships between Mr. Sheridan and the directors or executive officers of the Company. Similarly, there are no family relationships between each of Messrs. Allen and Blickenstaff and the directors or executive officers of the Company.”
Listen there is no delicate way to talk about this “personal relationship” even now that it has been disclosed. Several experts we have spoken with on this subject noted that even when disclosed most Boards would avoid having the CEO and CFO having a “personal relationship”. It was for this reason we felt the Board would look outside Tandem for Kim’s replacement. Frankly we are shocked the Board is comfortable with CEO and CFO having a “personal relationship.”
Again, this has nothing to do with Mr. Sheridan or Ms. Vosseller, who must feel somewhat relived now that this “personal relationship” which many have known of has now been disclosed. Still this is 2019 and again there is no delicate way to say this but not all “personal relationships” work out, just ask Jeff Bezos. Mr. Sheridan and Ms. Vosseller will work closely on a wide range of subjects including personal issues. No matter what actions or controls the Board puts in place this situation seem ripe for problems.
What makes this more stunning is that Tandem is entering a critical phase with the Control IQ on deck. A system which will compete head on with the 670G. Frankly the last thing Tandem needs with this critical launch approaching is any distractions. The harsh reality here should anything go haywire with this “personal relationship” someone is going to end up on the unemployment line and whether it’s the CEO of CFO it really doesn’t matter as both positions are critical with this launch.
Let’s be very clear we have nothing against Mr. Sheridan and Ms. Vosseller having a “personal relationship” and wish them well. However, we are not sure with the many high qualified candidates available who could have been selected as CEO this was the right decision by the Board. Even with the disclosure it just doesn’t sit well especially in this day and age. Love may make the world go around but we aren’t sure Tandem’s stakeholders want their stakes at risk of a breakup between the CEO and CFO. The insulin pump market even without this added risk is tough enough.