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Many CEOs have very one-sided contracts that makes firing them expensive. A great number of companies have boards that are highly sympathetic to the CEO which m
by indymike 4y ago
Many CEOs have very one-sided contracts that makes firing them expensive. A great number of companies have boards that are highly sympathetic to the CEO which makes it take even more effort. In a lot of cases bigger shareholders referred the CEO to the board when they hired the CEO, so the board members that represent that shareholder's interests are invested in the bad CEO. So, you basically end up having to fire a friend that your friends invested in and lose a lot of money, and then have to find a new CEO.
I really like companies where the board isn't friendly to the CEO, and their meetings start with a vote on, "Shall the CEO be retained?" If there's a "No", then the floor opens for a discussion of CEO performance.
- refurb 4y agoNot only that, but changing CEO's has PR risk. Fire a CEO? Suddenly everyone is going to assume something is really wrong with the company.
- indymike 4y ago> Suddenly everyone is going to assume something is really wrong with the company. This can work both ways. New management can be a really big boost.
- refurb 4y agoIt can, but my point is rather around "CEO changes should be carefully thoughtout". In otherwords, sometimes it's better to keep the existing CEO even if the performance isn't spectacular because turfing them out makes the market think things are worse than the company is letting on. So if you do replace a CEO, it's usually accompanied by a deliberate change in strategy and very carefully planned out.