CEO of $14 billion electronics company can’t talk about resignation after internal investigation

After a four-week internal investigation into $14 billion electronics maker Jabil Inc., CEO Kenneth “Kenny” Wilson abruptly resigned just after marking one year at the helm of a major supplier. from Apple, Cisco and General Motors. .

In stepping down as CEO last week, Wilson agreed to a series of restrictive agreements with a strikingly unusual provision: He is prohibited from speaking to the media except to say “no comment,” according to his separation agreement. Wilson was also required to provide the company with a written affidavit prior to his formal departure on May 18, but Jabil redacted the contents of the investors’ affidavit. In exchange, Jabil paid him $2 million and allowed some of his unvested equity awards to continue vesting. (The company removed its disclosures about its unvested equity.)

The company previously benched Wilson on April 15 and placed him on leave while it conducted an investigation “related to corporate policies,” allowing him to collect his $1 million salary during that time. Jabil did not disclose details about the investigation, only stating that it was not related to the company’s financial reports. He also did not speak about the background and outcome of the investigation. Instead, Jabil simply announced that Wilson “ceased serving as CEO” on May 18 after the investigation was completed.

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

Under the terms of his departure as CEO, Kenny Wilson is subject to a two-year non-compete and non-disparagement agreement, which are typical terms when an executive and a company agree that the executive will resign.

But then it becomes unusual.

Wilson’s agreement requires him to “not comment” or not respond if he is contacted by a member of the press, and Wilson must alert Jabil general counsel Kristine Melachrino by email about any media inquiries within of 72 hours.

“You will not permit, assist or encourage others to publish or otherwise communicate with any media representative regarding any aspect of your employment or this agreement,” the agreement says. In turn, Jabil agreed not to respond, or respond “no comment,” to Wilson’s employment, nor to provide the joint announcement. The agreement extends to any other form of official or unofficial communication with the media, including “deep background,” the agreement specifies.

For that, Wilson is paid $2 million and will retain his long-term incentive awards, as well as the cash value of unvested long-term equity awards that would vest in 2024. (He had to give up equity which was scheduled to vest in 2025 and 2026.) According to Jabil’s 2023 shareholder report, Wilson earned $1 million in salary and earned a long-term equity award valued at $6.2 million along with his promotion to director executive in April 2023. His total salary in 2023 was valued at $10.2 million, and he had unvested equity valued at around $7 million, according to Jabil reports.

Brittany McCants, a labor and employment partner at law firm Barnes & Thornburg, explained that the $2 million payment was not characterized as compensation; It was a one-time payment made in exchange for continuing to comply with the restrictive covenants and submitting an affidavit. “This payment structure, along with previous disclosures referring to an investigation, suggest an unfriendly separation between the executive and the company, so the company has an interest in paying to have this done quickly and at the same time protect itself.” , said. Fortune.

Public companies generally do not formally fire CEOs or other executives “for cause” because it will likely have a negative impact on the company’s stock price, as this may indicate discord or, worse, incompetent leadership in the high direction. And while it is standard for companies to avoid disclosing the results of an investigation and the specific nature or reasoning why a CEO is leaving after an investigation, the broad media communication provision in the separation agreement that outlines explicitly what Wilson can and cannot say to the media is not typical.

“It seems to me that they are concerned about some type of specific discussion about the investigation or his departure,” McCants said. “They are giving very explicit instructions about what you can and cannot discuss about your employment, your departure and the investigation, making the decision of what to share and what not to share outside of your judgment and discretion.”

Typically, companies only rely on a non-disparagement clause in separation agreements to adequately protect themselves from protests by a departing executive. Wilson’s contract includes a non-disparagement clause in addition to his press ban.

“It appears there was some sort of ongoing disagreement or discord here, and the company is focused on trying to make sure its brand and reputation are fully protected,” McCants said.

In other words, it doesn’t seem like Wilson and his former employer are getting along.

In contrast, when departures are more amicable, companies typically ensure that the characterization of the departing executive’s separation focuses on a new opportunity or retirement, so there is no risk of negative assumptions in the absence of communications about a ” job well done” and positive wishes. in future projects, McCants said.

Jabil did not comment in response to a request. Wilson did not respond to FortuneThe attempts to reach him.

Wilson’s departure earned him a 10 on “The Push-Out Score” from independent research firm Exechange, which tracks executive departures and ranks on a scale of 0 to 10 whether a CEO or CFO was forced or pressured to resign. to resign rather than voluntarily. Wilson’s age, 58, as well as his brief tenure as CEO, and the form and language of the notice contributed to the score, Exechange researcher Daniel Schauber wrote in the company’s April report. “The constellation of all the above warning signs leaves little room for interpretation and indicates that Wilson was under pressure to step down as CEO,” he explained.

Wilson’s departure comes as Jabil’s public ratings on employee review platform Indeed have trended downward from 3.04 in 2022 to 2.92 in 2024, out of 3,900 reviews and with 5.0 as the highest. Jabil scored below average on Indeed’s workplace wellness survey, with a score of 68. Overall, the company scored 3.8 out of 5.0 on both Indeed and employee platform Glassdoor. Among categories employees can review, including work-life balance, compensation, 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, Florida, said it was mostly “a boys club with terrible communication.” An inspector currently working at the company in Elmira, New York, said they loved the job but felt they were treated poorly. “Everything about who you know, who you are friends with, who you are related to, or who you are dating,” the employee wrote. “HR is biased, good luck getting help when you have a problem with a coworker or supervisor.”

However, other reviewers gave the company five stars, saying it was a great place to work with “excellent” management, good salaries and benefits, and a professional work culture. Wilson earned an 86% approval rating on Glassdoor.

His departure sparked a large-scale restructuring at Jabil, which was another refrain among employees’ constructive criticism of the company. “Form a real strategy around our vision statement. Stop haphazardly reorganizing in hopes of finding a savior,” one Comparably employee wrote in a review addressed to the company’s leadership.

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

And Steven Borges, an executive who had taken a leave of absence as part of a planned retirement and had signed a mutual separation agreement, returned to his role on May 18 under the title of executive vice president of the company’s global business units. . Jabil extended Borges’ employment with an amendment to his initial agreement to retire. That separation agreement did not include the media provision included in Wilson’s agreement.

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