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Good morning, everybody.
I think you’re gonna see there’s a common theme
across some of the presentations.
Moses are -- CEOs are our current day prophets, right?
Today we’re waiting for Steve Jobs to come down with his tablet, right?
If you look at this headline,
he defied downturn, cheated death, and changed our world.
You know, that’s a big bill for a CEO.
We see increasingly lists of most admired, most valued,
most respected CEOs.
And as academics, we were really struck by the fact
that there really hadn’t been any systematic look at who had delivered
performance sustainably over the long term.
Some days we talk about it but it really wasn’t getting measured.
And so we set out to do a study that would take a look at the performance
of CEOs over the length of their tenure.
What we decided to look at was total shareholder return
both adjusted for industry and for country as well as market cap change
and we basically took all the CEOs in the SMP Global 1200 in Brick 40(01:08)
who were in office from 1995 to 2007.
This is our top 100.
We made a list.
One of the most interesting things you can see right away is that
there’s a whole number of them we couldn’t even find a photo for,
so interesting in the age of the celebrity CEO.
Incredible performance in this top group,
so nearly one thousand percent on average shareholder return.
Not household names.
I don’t know how many of you can recognize some of these guys.
They’re in the top 20, okay.
Retired CEO Samsung, Joh-Yong Yun,
really not household names.
We find out to be very, very, very interesting given the headlines.
Only one woman in the top 100,
only 29 in the list of 2,000 CEOs, interesting thing as well.
I mean, it partially has to do with the fact that very few women
have been imposed prior to 2002, so partially it’s a historical effect,
but really very small numbers, very little overlap with the list of
most highly paid CEOs.
There are some but not a high overlap and, obviously, this feeds the debate
of how do we take into account longer term measures of performance.
Do we need to rethink compensation for today’s age?
And I think that the study can inform that to some extent.
Who are they? First, very widespread performance.
It’s not limited to the U.S., to the U.K. and the top 50
we had 16 countries represented, 25 if we go to the top 100.
And so that’s an even -- in the top 5, two Americans, one Indian, one Korean,
one Russian, so really, really widespread as well with regard to industry.
This industry effects, so just to give you an example,
energy is over represented in the top
relative to how many there are in the total sample.
On the other hand, you have things like automotive which, as you might expect,
is at the bottom of the list.
We’ve got Hyundai in the top 29 at number 29 in the top.
They’re mostly insiders.
This is a picture of the famous --
We want a savior from the outside,
particularly when a company is doing poorly
but the insiders had an edge in performance
and even in troubled companies there was no difference.
The MBAs did better despite some vivid anecdotes
and this was particularly the case for the younger CEO.
So my boss Frank, is very happy to see that finding
and we can talk more about why that might be but an MBA effect.
Also, what we call the runway effect.
If you take over a company that’s doing poorly, you have more upside.
And so those who were taking over companies that were not doing so well
tended to perform better than those running more smoothly,
working kind of companies, and so that raises also a conundrum
about how we’re gonna evaluate CEO performance comparatively.
Real issue with passing the baton,
in our sample there were few cases of a top rated CEO
being succeeded by a top rated CEO.
There tends to be a kind of a drop off
and we can also think of some vivid examples there,
interesting thing to kind of mull over.
So just to wrap up on this, again, this has been the theme.
Our CEOs are superheroes and super villains.
By the way, the villain is always the corporate guy, right?
But there’s a real argument to be made here for the effect of CEOs
and I think that means that we really have to think hard
about how we’re gonna evaluate them particularly as reinventing the job
because this is not a story about a -- hero.
It’s really a story about these quiet CEOs,
a lot of them under the radar screen but building relentlessly these
high performing teams that are all about delivering sustainable results.
Thank you very much.