LPL Financial's decision to fire President and CEO Dan Arnold Tuesday for violating policies tied to "a respectful workplace" caught a lot of industry observers off guard.
Though it declined to elaborate in detail on its decision, the broker-dealer stated that its board ended Arnold's employment "for cause" based on the recommendation of a special committee of directors — which followed an investigation led by an outside law firm that found he'd made statements to employees that violated the firm's code of conduct.
Commentators have said that LPL has done very well under Arnold as CEO since 2017, both in terms of advisor recruiting and in capitalizing on the independent broker-dealer consolidation trend.
But all eyes are on the firm now to see how it will navigate this situation.
This was the conclusion drawn in email correspondence with ThinkAdvisor by Simon Hoyle, recruiter and founder at RIA Choice.
As Hoyle noted, with big companies come big leadership expectations, and it's not uncommon to see top executives dismissed from major organizations if company performance lags — though that doesn't seem to be the case here.
Thus, "when company growth and stock price have performed very well, it can appear something else is going on that might cause a hit to business reputation," Hoyle said.
Asked if LPL's status as a publicly traded firm matters, he replied: "Yes. Public companies are held to higher standards. Not only is internal morale and productivity potentially affected [by leadership] but investor confidence as well. The stock was down about 5% after-hours [Tuesday] based on the news. So, stock price and public perception carry a fair amount of weight."
