Successful CEOs possess each of the attributes described below. This is an unscientific analysis based upon my prior experience covering and acquiring companies (equity research analyst; M&A executive) as well as my current role as founder of CEORater. It is important to recognize that while these attributes are qualitative in nature they do impact the…
The CEORater Technology Founder CEO Index returned 8.2% and 8.4% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018 – March 29th 2018 period.
The S&P 500 Information Technology (TKR: S5INFT) returned 1.8% on a Weighted basis over the same period.
The Guggenheim S&P 500® Equal Weight Technology ETF (TKR: RYT) returned 4.7% on an Unweighted basis over the same period.
Bezos is Top Tech CEO with a Total Stock Return of 83,639%
We recently queried our CEORater database to identify the Top Technology CEOs as measured by stock price performance during each CEO’s tenure. Amazon’s Jeff Bezos topped our list by a wide margin. For purposes of this exercise it helped to have been a CEO for an extended period of time. It is also interesting to note that 8 of the Top 10 and 14 of the Top 20 CEOs on our list are Founder CEOs. We define “Founder” CEOs as those CEOs who were present for the first dollar of revenue earned. Additional detail may be found at CEORater.com. Contact firstname.lastname@example.org for Excel spreadsheet detail.
Our Hypothesis: Founder CEOs Will Outperform Over the Long-Term
We believe that founder CEOs will generally outperform non-founder peer group CEOs as well as broader benchmarks over the long-term. We believe this to be true both in terms of stock market returns as well as operating performance as measured by traditional financial measures such as Cash ROIC, ROE, ROA and Economic Value Added.
We recently created the CEORater Technology Founder CEO Index in part to help test our hypothesis. Over time we plan to operationalize the index to where investors may use it as an investment vehicle (stay tuned).
Founder CEOs tend to take a long-term view of the companies they created (their children). Where hired CEOs focus on the current quarter and year, many founder CEOs want their respective companies to thrive in perpetuity.
Legacy Matters to Founder CEOs
It’s about legacy for founder CEOs:
- It’s why Jeff Bezos (AMZN) thinks about 50 year increments as opposed to quarterly increments;
- It’s why Reed Hastings (NFLX) pushed OTT, original content and international investment when many investors wanted a U.S.-focused DVD distribution company;
- It’s why Bill Stone (SSNC) has built one of largest FinTech companies during a period when much of the Capital Markets industry has become commoditized.
We reviewed Total Stock Returns over the January 3rd 2017 – February 8th 2018 period:
- The market cap weighted total stock return for the CEORater Technology Founder CEO Index over the measured period was 55.5%.
- The market cap weighted total stock return for the S&P 500 Information Technology Index (ticker: S5INFT) was 32.0% over the same period.
We examined the stock performance of Technology companies led by founder CEOs vs. a broader Technology index where the CEOs of the component companies are not necessarily company founders. The CEORater Technology Founder CEO Index is an extract from our CEORater database. You may view the component companies here.
We reviewed the period from January 3rd 2017 through January 22nd 2018:
- The unweighted total stock return for the CEORater Technology Founder CEO Index over the measured period was 46.71%.
- For comparison we used the Guggenheim S&P 500® Equal Weight Technology ETF (ticker: RYT) which returned 42.85% over the same period.
Earlier this week Amazon released the 20 finalist cities in the Amazon HQ2 sweepstakes. By running a prolonged, public HQ location selection process, Amazon is in effect running (and benefitting from), the world’s largest free marketing campaign. We discuss in CEORater Podcast episode 112 (which is now available on Amazon Alexa-powered devices such as the Amazon Echo product family via TuneIn).
In our view Intellectual Curiosity is the most important attribute that a CEO may possess. Listen to our recent Podcast on the subject.
CEORater Podcast on the subject of CEO compensation: Ep. 65: CEO Compensation Analysis: “Comp-to-Cap”:
I don’t anticipate writing a review of the iPhone X – it’s not what we do here or at CEORater. However, the folks at the WSJ have taken the time to report their findings on Apple’s facial recognition technology (“FaceID”) which we covered in an earlier podcast.
You may access the Wall Street Journal article HERE