CHICAGO, April 4, 2011 /PRNewswire/ — A study of S&P 500 non-financial companies over 20 years (1988-2007) shows that those companies that exclusively promote CEOs from within outperform companies that recruit CEOs from outside the company. The study identified 36 companies that exclusively promoted CEOs from within their own ranks over this 20-year time period and found that these companies outperformed other companies across seven measurable metrics: return on assets, equity and investment, revenue and earnings growth, earnings per share (EPS) growth and stock-price appreciation.

Paul A. Laudicina, chairman and managing partner of A.T. Kearney, commented, "Boards of directors often fail when it comes to CEO succession planning. Rather than focus on leadership development and creating a qualified stable of internal CEO candidates, boards too often end up going outside the organization to fill the top spot. Unfortunately, their stakeholders more often than not pay a big price for their star search."

This analysis also found that no non-financial S&P 500 company, with externally recruited CEOs, generated 20-year performance numbers that surpassed or even equaled those of the top 36 in the above metrics.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.