DocuSign (DOCU) CEO Dan Springer left the company on Tuesday, and a review of the company’s stock price in addition to public comments made by the chief executive indicate why.

The apparent impetus for Springer’s departure is plain to see in the company’s stock price: DocuSign stock is down 80% from a record high reached in the fall of 2021.

Following each of the company’s last three quarterly reports, shares have lost at least 20% of their value.

And as we re-read DocuSign’s earnings conference call from earlier this month, the signs that change in the company’s C-suite may have been needed were apparent.

Springer told analysts, in short, that he misread the temporary nature of a surge in demand — and the resulting surge in the company’s share price — and that left the business overstaffed and mispositioned for the current turn in the cycle.

“I would agree with the assessment that initially… I underestimated the impact in the post-COVID demand acceleration, and maybe how dramatic that was,” Springer told analysts, noting that the business’ growth rate roughly doubled and in turn, so did the size of the company.

“So it wasn’t that we were not aware of the dramatic economics of [this shift]” he added. “I think we just didn’t understand what portion of that would be things like one-time use cases or an acceleration where people bought in a more fulsome way.”

In December, after DocuSign shares fell 40% after earnings, Springer told Yahoo Finance: “I do not see the reaction in the stock price to be commensurate with what I think is a much less dramatic business performance change.”

DocuSign headquarters in San Francisco on February 8, 2020. (Getty Images)

In response, Springer purchased $5 million of DocuSign shares at an average price of $143.95. DocuSign shares were trading around $63 on Tuesday morning.

DocuSign’s annual revenue growth slowed from 42% in its fiscal third quarter — the quarter that prompted a 40% drop in the stock — to 25% in its fiscal first quarter reported earlier this month. In the current quarter, DocuSign expects top-line growth to slow to 17% to 18%.

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As a board of directors with a fiduciary duty to shareholders, a share price decline and public comments like these are more than enough to prompt swift and substantive conversations about the need for new leadership.

Turnover at DocuSign as a sign of the times

Springer’s departure likely won’t be the last of the variety in which a CEO that sees a company through the frantic COVID-related growth phase finds themselves leading a bloated business getting hammered by investors in the new environment.

Rising interest rates to tame inflation have prompted waves of concern from economists who see recession risks on the rise. At the very least, investors, economists, and consumers alike seem to agree that a slowdown in growth will be coming in the quarters ahead.

That means that the coming economic and investing backdrop — and the demands it makes on investors, consumers, and executives — will be quite different from the rapid growth environment that took hold from the summer of 2020 into the fall of 2021.

The list of companies with share price declines greater than 50% this year is long, and there is little doubt that dozens of boards of directors are either considering or putting into motion plans to replace their chief executive.

Before the pandemic, CEO turnover surged. At the time, we argued that this was a natural part of a maturing economic cycle. In the winter of 2021, turnover in the C-suite again rose as the most acute phase of the pandemic-induced downturn passed.

Some 18 months later, the cycle appears to be turning again.

Rising rates and slowing growth ask different questions of company executives — in many cases, it will take new leaders to provide the answers.

Myles Udland is the senior markets editor at Yahoo Finance. Follow him at @MylesUdland

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