Interim CEOs

June 29, 2006

Interim CEOs


Time to mention our mini-analysis on Interim CEOs. I had noticed that there was an emerging class of CEOs — Interim or Acting CEOs. After reviewing the number of Interim CEOs in publicly-held companies (there were two in privately-held companies) since 2003 and their financial performance, the following information was released this week. You can find the full data on the Weber Shandwick web site.

The number of Interim CEOs has grown markedly in recent years. Last year, there were nine Interim CEOs in place at major companies, a more than four-fold increase from 2003. Notably, more than two-thirds (69 percent) of the 13 identified publicly traded companies led by Interim CEOs since 2003 dramatically outperformed an index of peer companies by a median of 10.8 percent.

Despite the perception that these CEOs are primarily transient caretakers, our analysis reveals that these executives’ performances may be vastly underestimated.

Other interesting findings on this newly emerging leadership group are:

****On average, an Interim CEO’s tenure was 159 days or 5.3 months, ranging from 59 to 300 days.
****During the service of the nine outperforming Interim CEOs, their company’s stock gained a median of 18 percent.
****Among all Interim CEO-led companies examined over the past three years, the median company outperformed an index of peer companies by a significant 8.1 percent.

CEOs continue to depart at a rapid pace as corporate boards take more active roles in overseeing executive performance. As CEO tenures increasingly shorten and former CEOs depart unexpectedly, boards frequently find that successor CEOs are not identified or properly groomed for the chief executive position. Interim CEOs represent a smart solution until boards can find qualified successors or gain confidence in the Interim CEO’s leadership ability.

Interim CEOs generally may deliver superior stock market returns because the market is rewarding the board’s decision to change leadership. Shareholders may experience relief that the company’s strategic direction is finally in new hands and that the short-term CEO will make the necessary tough decisions.

Last week I also recall that an Interim CFO was named. Perhaps at Allied Healthcare. Seems to be catching on.

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Leslie Gaines-Ross
Leslie Gaines-Ross
lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of reputations.

4 Comments
  • Bob Van Hook
    Posted at 15:06h, 07 July Reply

    I own a small firm that specializes in providing interim executives for associations and nonprofit organizations. Our business is booming as well – currently we have seven executives placed. Last year at this time we had only three. The average tenure for our execs is about the same as in the Weber Shandwick study, about 9-12 months. We, too, pride ourselves on improving the organization while we are engaged, but we don’t have the same metrics as for-profit firms. Thanks for the information.

    Bob Van Hook
    http://www.transitionceo.com

  • LGR
    Posted at 01:35h, 12 July Reply

    Bob, thanks for these insights. I am convinced this is going to continue. Today William-Sonoma has a new interim CEO….

  • Anonymous
    Posted at 09:24h, 20 July Reply

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  • Anonymous
    Posted at 15:59h, 21 July Reply

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