Industry Pioneer Richard Santulli Resigns

Business Jet Traveler » October 2009
Thursday, October 1, 2009 - 5:00am

Richard Santulli resigned as chairman and CEO of NetJets, which has been owned by Warren Buffett's Berkshire Hathaway since 1998. [See related stories on pages 4 and 50.--Ed.] Santulli founded the firm, which introduced the fractional-ownership concept, in 1986. He will remain with the company as a consultant for at least a year.

Some sources suggest that NetJets' financial troubles might have led to Santulli's resignation. Just three days after his announcement, the company reported that revenues in the first half of this year were $1.024 billion lower than in the first half of 2008--a 42-percent drop. According to Berkshire Hathaway, the decline reflected an 81-percent reduction in aircraft sales and a 22-percent cut in flight-operations revenues.

David Sokol, who had been chairman at Berkshire-owned MidAmerican Energy Holdings, is now chairman and interim CEO of NetJets and has announced a new management structure. In addition, the company has confirmed that it is moving its headquarters from Woodbridge, N.J., to Columbus, Ohio.  

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Quote/Unquote

““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”

-David Yermack