Tag: CEOs

Your CEO’s Personality Influences His/Her Ability to Scale

Your CEO’s Personality Influences His/Her Ability to Scale

It is true. Your CEO’s personality influences his/her ability to scale (among other things). It may seem self-evident. One’s intuition may suggest such a relationship between personality traits and workplace effectiveness. Well, it is more than a hunch. Published research demonstrates a relationship between CEO personality traits and company performance.

Gow, Kaplan, Larcker and Zakolyukina used the Big 5 personality framework to conduct their research. The Big 5 personality framework consists of the following 5 personality traits:

  1. Openness: CEOs who score high in this area are intellectually curious, value uncommon thought processes, are creative thinkers, are less prone to selective perception bias, exhibit strategic flexibility and encourage experimentation and risk-taking.
  2. Conscientiousness: CEOs who score highly in this segment are achievement-oriented, results and performance-driven. They also run the risk of selective perception bias and of having a narrow field of vision. 
  3. Extraversion: CEOs that score highly in this category are energetic, enthusiastic and forcefully communicate their ideas. They are more likely to initiate a change of strategic direction and are less likely to seek input and ideas from direct reports. 
  4. Agreeableness: CEOs in this category are typically trusting, avoid conflict, may avoid making difficult decisions, prefer flat organizational structures and seek to build consensus. 
  5. Neuroticism: CEOs overweight this category are more prone to psychological stress and are prone to anxiety and hostility. They may have a negative bias when digesting new information. 

We have contemplated embedding CEO Personality Analytics into our CEORater platform for over a year. My view is that this capability could have broad application for institutional investors, Board members, executive recruiters and C-Level executives.

We are testing data as we speak. Personality trait assignment is executed using information readily available in the public domain (transcripts, public blog posts, etc.). I plan to share the output from our research in the coming weeks and months.  

 

CEORater Technology Founder CEO Index has Outperformed Year-to-Date<span class="badge-status" style="background:red">Premium</span> 

CEORater Technology Founder CEO Index has Outperformed Year-to-DatePremium 

We created the CEORater Technology Founder CEO Index in 2017 in large part to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Technology Founder CEO Index returned 13.0% and 10.5% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018…

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Thinking Through Opportunity Cost & Corporate Strategy as EPS Season Approaches<span class="badge-status" style="background:red">Premium</span> 

Thinking Through Opportunity Cost & Corporate Strategy as EPS Season ApproachesPremium 

Making Numbers Is Not Enough The hallmark of a great company is not one that simply meets or beats consensus estimates with some regularity. Imagine if Reed Hastings and Netflix chose not to pursue the company’s over-the-top (“OTT”) strategy when investors where hungry for DVD profits. Imagine if Jeff Bezos and Amazon scaled back their…

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Square’s Jack Dorsey – Technology’s Best CEO Value

Square’s Jack Dorsey – Technology’s Best CEO Value

Square’s Jack Dorsey – Tech’s Best Value Over Past 14 Months

We dipped into our CEORater database as we regularly do and ran a query to return the Technology stocks with the greatest stock price appreciation over the period January 3rd 2017 through February 23rd 2018.

We then took the Top 20 Technology Companies as measured by stock price appreciation during the period and asked the question: “Which of the 20 Technology CEOs were the best value in terms of CEO Compensation required to generate each percentage point of stock price appreciation?” For example, in the case of Mr. Dorsey at Square (tkr: SQ, Dorsey is also CEO at Twitter tkr: TWTR) who finished first on our list, for every $7 dollars of CEO Compensation the Company generated one percentage point of stock price appreciation.

Second on the list was Take-Two Interactive’s (tkr: TTWO) Strauss Zelnick at $183 of CEO Compensation for every percentage point of stock price appreciation generated. The table below details the Top 20 CEOs. Further, below the table each CEO name is linked to his/her CEORater profile page where additional detail may be found.

Top Value Tech CEOs Pic
Technology CEOs – Best Value Jan 3rd ’17 – Feb 23rd ’18. (Click to Expand View)
  1. Jack Dorsey, SQ
  2. Strauss Zelnick, TTWO
  3. Tobi Lütke, SHOP
  4. Lew Cirne, NEWR
  5. Jack McDonald, UPLD
  6. Michael D. Rumbolz, EVRI
  7. Matt Maloney, GRUB
  8. Guy Sella, SEDG
  9. Valentin P. Gapontsev, IPGP
  10. Martin Plaehn, CTRL
  11. Brian Halligan, HUBS
  12. Chip J. Paucek, TWOU
  13. Jayshree Ullal, ANET
  14. Vlad Shmunis, RNG
  15. Steven W. Streit, GDOT
  16. Kevin M. Sheehan, SGMS
  17. Philippe Courtot, QLYS
  18. Joey Levin, IAC
  19. Jen-Hsun Huang, NVDA
  20. Reed Hastings, NFLX

Top Tech CEOs: Bezos Is Best as Measured by Total Stock Return

Top Tech CEOs: Bezos Is Best as Measured by Total Stock Return

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 sales@ceorater.com for Excel spreadsheet detail.

Top 20 CEOs TSR
Top Technology CEOs based upon Total Stock Return (“TSR”) as measured during the CEO’s tenure. BP = stock price on CEO start date or IPO date (if not public on CEO start date). EP = stock price on Feb. 16th 2018. Contact sales@ceorater.com for additional detail.
AMZN 1
AMZN’s Jeff Bezos. Click on the image to expand.

NFLX 2

NVDA 3

MCHP 4

ATVI 5

CSGP 6

STMP 7

CRM 8

CHKP 9

ULTI 10

Technology Companies Led by Founder CEOs Outperform the Benchmark

Technology Companies Led by Founder CEOs Outperform the Benchmark

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.
AMZN
Jeff Bezos, AMZN Founder & CEO
NFLX
Reed Hastings, NFLX Founder & CEO
SSNC
Bill Stone, SSNC Founder & CEO

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.

Two’s A Trend: “CEORater Technology Founder CEO Index” Wins Second Match

CEORater-Technology-Founder-Index-1.png

We wanted to see how the CEORater Technology Founder CEO Index would fare if we were to market cap weight the components (review component details here). Therefore we compared our CEORater Index to the S&P 500 Information Technology Index (Ticker: S5INFT). We compared total stock returns for each for the period January 3rd 2017 – January 22nd 2018:

  • The market cap weighted total stock return for the CEORater Technology Founder CEO Index over the measured period was 63.72%.
  • The market cap weighted total stock return for the S&P 500 Information Technology Index was 46.05% over the same period.

These two most recent TEK2day posts are just the beginning of our analysis in an effort to test our hypothesis that Technology companies led by founder CEOs will in the aggregate outperform peer group companies led by non-founders.

CEORater Technology Founder Index Outperformed S&P 500 Technology ETF

CEORater Technology Founder IndexWe 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:

Distracted CEOs and CEO Overreach<span class="badge-status" style="background:red">Premium</span> 

Distracted CEOs and CEO OverreachPremium 

We Have Entered an Unprecedented Era of Shareholder Tolerance It is interesting that corporate boards and institutional investors are willing to tolerate “Distracted CEOs” and founder CEOs who wish to exercise outsized control of the companies they founded. Both are examples of poor corporate governance. Our definition of a Distracted CEO is the CEO that…

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