Shares of Planet Fitness (NYSE: PLNT) are sinking Friday. The company’s stock was down 13.9% as of 10:30 a.m. ET, according to data from S&P Global Market Intelligence.
Planet Fitness published a press release announcing a major leadership shakeup before the market opened today. The company announced that board member Craig R. Benson would be stepping in as interim CEO following a decision by the board of directors to transition to new leadership and replace former CEO Chris Rondeau.
Shareholders are typically displeased with news of sudden shakeups at the top of the management structure. While it isn’t always the case, unexpected changes in the CEO role are sometimes followed by other bad news about the company or the departing executive. Additionally, Rondeau has been a leadership fixture at the gym chain over the last decade.
Rondeau became Planet Fitness’ CEO in 2013 and has played an important role in its successes. However, the company has been heavily reliant on debt to fund growth lately, and the gym chain’s board of directors may have been unhappy with this or other elements of Rondeau’s strategy and execution.
Rondeau’s departure follows the exit of former President and Chief Operating Officer Edward Hymes at the end of May. Hymes had joined the company in those roles in January but exited less than half a year later.
Despite his exit as CEO, Rondeau will provide advisory services to help with the leadership transition. He will also continue to serve on Planet Fitness’ board of directors and is set to be nominated for reelection next year.
Even so, the surprising uptick in turnover among high-level management this year raises questions about where the business is heading next.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Planet Fitness. The Motley Fool has a disclosure policy.
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