Business

Life at the top of the CEO will be difficult

Inheritance has become a hot topic these days, not just because the name’s must-see HBO series is approaching its finale.Murdoch — Oops, I mean Roy — Brothers make it public for his dad’s media throne, Zara’s heir in the real world. Malta Ortega He conducts at Inditex, a Spanish fashion conglomerate.Meanwhile, the eccentric high-tech Titan Jack Dorsey He has resigned as Twitter CEO and is focused on leading the fintech company Square. Parag AgrawalThe Chief Technology Officer will become the social media giant.

Perhaps the new deal will not only give Dorsey more time to think about cryptocurrencies, but also more afternoon headspace. Yoga class The activist investor Paul Singer must have hated it.Of the singer Elliott Management No one wanted Dorsey to be dismissed because he shouldn’t lead two public companies. It may also be a sign of a greater escape from the C Suite as both market and real economy conditions become more difficult and the leadership of large publicly traded companies becomes more difficult.

Of course, some might argue that it has been the case for the last two years. In the first half of 2020, when the pandemic began, the board wanted to retain the CEO for Covid-19. However, the number of transition announcements has increased significantly since the second half of 2020. Studies show Russell 3000 and S & P 500 were co-authored by The Conference Board earlier this year. As the report’s authors state, corporate leaders cited increasing levels of “crisis management upheaval and burnout after exhausted years.”

This trend may be reflected in the fact that the inheritance gap between poorly performing and well-performing companies, which is usually very large, has narrowed significantly. The increase in turnover seems to be as much as executives being kicked out of them and staggering from their jobs.

It can get worse. Even before the pandemic, the depth and breadth of digital transformation created one of the most dynamic yet difficult business environments in memory. In addition to new concerns about employee health and well-being, supply chain credibility, changing consumer behavior, labor activity, inflation, and a new shift from the simple monetary policy of the Federal Reserve, you are very We are having a tough year.

In addition, the wave of future mergers and acquisitions could create unique redundancy for the C Suite. The number of public companies has been declining for nearly 20 years.according to According to OECD data, there are currently 30,000 fewer companies than in 2005. According to a new Schroeder report, of the 977 US companies that have been delisted since 2010, 84% have been delisted because they were acquired by another company.

Duncan Lamont, Head of Research and Analysis at Schroder Note: “The acquisition boom has been accelerating for years. But the party may just be in its infancy. The conditions are perfect for a further surge in M ​​& A activity. Many companies are in cash. Overflowing, private equity “dry powder” is close to record highs (funded but not yet invested) and borrowing costs are historically low. “

All this could offer a small kick to the stock — a wave of M & A like stock repurchases usually does. But it also leads to integration, which inevitably leads to new inheritance.

The standing CEO is full. The Fed’s long-standing rise in stock prices is changing with central bank chair Jay Powell, indicating that both tapering and rate hikes may come sooner than expected. That’s good because it removes bubbles from the market. But that’s not good for profit. There is no inflation seen in both goods and labor.

On the other hand, as the market changes, corporate leaders will probably be under pressure in every way. In the first place, activists like Elliott will definitely demand more belts. But unions enjoying a resurrection, governments seeking more environmental, social, and governance efforts, and everything else that has vested interests in “stakeholders” rather than “shareholder” capitalism. There is also pressure from the people of.

Of course, it’s a good idea to judge success by something other than the stock price. However, despite governments and regulators on both sides of the Atlantic trying to come up with ideas, there is still no clear consensus on what new indicators of corporate performance should be. It’s difficult for business leaders.

Indicators may be ambiguous, but CEOs are already not just about revenue goals, but also value clarification, unfairness efforts, talent management, supply chain organization, environmental impact, employees, customers, regions. The market evaluates our relationship with society. ..

Indeed, the authors of the Conference Board’s survey speculated that this could be another reason for the sharply narrowing gap in CEO succession between good-performing and poor-performing companies. .. As the survey pointed out, it is possible that “factors beyond stock market performance are beginning to become more significant” in the board’s decision to retain the CEO.

Fictitious Roy isn’t the only one dealing with scandals, stocks, and inheritance.By choice or coercion, more executives may have more time to complete them quickly Downward dog..

rana.foroohar@ft.com

Life at the top of the CEO will be difficult

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