I tend to agree with your assessment....the departure of an exec from the BOD is not a positive, no matter the reasons.  Longs will typically look for a rationale that softens the blow, 'he's 79 years old' 'he's on the BOD for another company that may end up in competetion so this is to avoid conflict of interests', 'they need to open a board seat for someone else...'

Whatever....no matter the reason they're all guesses, the fact is that Smith left.

More important to my of thinking is the market reaction.  I can see this pushing some shareholders over the edge, "to heck with it, I'm out".  In the grand scheme of things, as bad news goes this is small potatos.  If failure on Top-Line could be said to register as 8.5 on the Richter scale, then this departure is about a 1.5.....

About halfway through the market day we've only traded ~100K shares total....so while for some this may have been the straw that broke the camel's back, in terms of shares being sold its not much.  

If volume was a few million I'd think differently....