Tag: InstitutionalInvestors

Using CEO Personality Types to Identify Risk

Using CEO Personality Types to Identify Risk

We extracted data from our recent CEORater CEO Personality Analytics research findings. We have focused on the personality trait “Openness” for the purpose of this note.

Recall that CEO’s who score high along the “Openness” spectrum tend to be more adaptable and are better at navigating through changing customer markets, particularly those that may be experiencing disruption from new market entrants, changes in technology, etc.

CEO’s who score low on Openness are less adaptable and less effective in navigating choppy waters, less effective in driving growth during periods of change. Note that ACIW CEO Phil Heasley scores low on Openness (75th percentile) and how this score compares to ACIW’s financial and operational performance.

For the record we are not long or short any of the stocks mentioned in our research. 

Click To Enlarge Graphic

3 Rules for Tech CEOs

3 Rules for Tech CEOs

1.) Be Bold:

  • Similar to VCs, public investors want to invest in a bold vision. (See Tesla). Why does TSLA enjoy a premium valuation to other Auto OEMs? Answer: Musk’s vision and spin.

2.) Don’t Be Bullied by Investors  Dictate Your Story:

  • Tell the Street you plan to take margins down temporarily to pursue “X” initiative. Investors will cut you slack so long as you explain the rationale, the execution and the intended outcome.

3.) Balance Execution Today with Investment for Tomorrow:

  • Don’t fall into the short-term EPS growth trap at the expense of new product development, keeping your products fresh and building a culture of innovation.
  • If you pursue the short-term – investors will love you in the short-term (fleeting). The key is to build long-term value over years and decades (see AMZN, CSGP and SSNC as examples of the latter).
Your CEO’s Personality Influences His/Her Ability to Scale<span class="badge-status" style="background:red">Premium</span> 

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

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…

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How to Communicate CEO Succession Plans to Investors<span class="badge-status" style="background:red">Premium</span> 

How to Communicate CEO Succession Plans to InvestorsPremium 

Transparent CEO Succession Plans Are Best Communicating CEO succession plans to institutional investors does not have to be complicated. Generally speaking, transparency around your CEO succession process is a good thing. This should not be confused with providing investors with a play-by-play update (I would not recommend the latter). Here’s a high-level outline that may…

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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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