Behind Unusual Ouster of Company’s Top Three Leaders: A Troubled $14.5 Billion Merger

October 4, 2017 | Wall Street Journal

Dentsply Sirona’s chairman, CEO, president ‘weren’t hitting the numbers,’ one person says; few experts can recall such an extensive purge

Directors of Dentsply Sirona Inc. forced out its top three executives after a $14.5 billion merger completed last year ran into trouble, according to a person familiar with the matter.

The dental equipment giant disclosed Monday that its chief executive, executive chairman and president had all resigned last week. Dentsply Sirona directors terminated the trio without cause, a subsequent regulatory filing stated. Their sudden extraction represents a highly unusual move, leadership experts said.

The company said the departures of CEO Jeffrey Slovin, Executive Chairman Bret Wise and President Christopher Clark, who also was chief operating officer, were “intended to better position the company to achieve its potential” but declined to comment further. Board members decided to replace them because the combined company’s results “are behind where they are supposed to be,” the informed person said. “They weren’t hitting the numbers.”

Messrs. Slovin and Wise led the marriage of Sirona Dental Systems and Dentsply International, XRAY -1.21% ♦ a deal billed as a merger of equals. Mr. Slovin had run Sirona. Mr. Wise headed Dentsply, where Mr. Clark was president and finance chief. They didn't respond to requests for comment on Tuesday.

Dentsply Sirona, based in York, Pa., hired Mark Thierer as its interim CEO, with a six-month pay package worth $6.5 million, the regulatory filing said. The executive exits will enable Mr. Thierer to clean up the company's problems and hire his own people, the person familiar with the matter said.

It isn't clear how soon management changes will happen, however. "The remaining leadership team here is very strong and committed to the organization's success," Mr. Thierer said in an email.

He added that Dentsply Sirona directors will consider inside and outside candidates for the permanent CEO spot but declined to say whether he wants the role.

Mr. Thierer previously ran OptumRx, the pharmacy-benefit unit of UnitedHealth Group Inc. He assumed command after UnitedHealth took over Catamaran Corp., a pharmacy-benefit manager where he was CEO.

Dentsply Sirona also elected longtime board member Eric Brandt as its new chairman and Bob Size as interim president and operating chief. Mr. Size had recently retired as a Dentsply Sirona executive.

The leadership shake-up came after the company in August lowered its full-year earnings guidance. It also reported revenue for the latest quarter that slightly missed analysts' estimates due to weaker-than-expected U.S. and technology sales.

Dentsply Sirona previously announced it was cooperating with a Securities and Exchange Commission probe about its accounting and disclosures relating to transactions with a distributor. Efforts to resolve the SEC inquiry efforts are "in a pretty good shape," the person familiar with the matter said.

The executive departures aren't related to issues involving the company's accounting policies or practices, the company said Monday.

Several leadership specialists couldn't recall any other big business that simultaneously pushed out its three highest-ranking executives. "You rarely ever see that kind of shakeup in a public company," said Jeffrey Cohn, managing director of global CEO succession planning at executive recruiters DHR International.

Spencer Stuart has been hired to conduct the search for a permanent CEO and COO, according to another person familiar with the matter.

"To have the three top leaders get taken out is extremely disruptive," said Paul Winum, co-head of board and CEO services at RHR International LLP, a leadership-development firm. Mr. Thierer must "take actions immediately to correct the [company's] course."