CEOs Have 18 Months to Show Results

May 3, 2001 (PLANSPONSOR.com) - New CEOs have between 14 and about 18 months to make their mark at a listed company, according to research studies conducted by public relations firm Ketchum and its research unit, Reputation Laboratory.

Ketchum ran two separate US studies:

  • a quantitative survey of 1,000 individual investors
  • a qualitative survey of 25 Wall Street analysts and US portfolio managers.

Key findings show that:

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  • the typical individual investor will give a CEO just under a year and a half to make a difference
  • Wall Street professionals were less forgiving, allowing only 14 months for a CEO to demonstrate results
  • around 39% of 1,000 individual investors surveyed felt this time-frame was shorter than 10 years ago
  • 84% of the qualitative survey respondents say today’s timeframe is shorter than a decade ago
  • almost half believe the timeframe to be shorter by between one and three years.

Moreover, management quality was found to correlate with overall corporate reputation, weighted more heavily than even product quality or charitable giving, according to survey results.

Ketchum’s research among Wall Street professionals showed that:

  • a third of those asked feel that CEOs are not worth the compensation they receive in cash and options
  • about 75% do not think that CEOs deserve the severance payments that they receive
  • the same percentage believe it is better to appoint an outsider than an insider as a CEO of a troubled company.

– Camilla Klein        editors@plansponsor.com

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