The Exchange

CEOs Long on Experience Often Best For Short-Term Results

The Exchange

By Robert A. Damon

A recent article by Beth Kowitt of CNNMoney highlights some of the oldest CEOs, including four in their 80s: O. Burton Smith of Sonic Automotive (SAH) (86), Warren Buffett (82), Rupert Murdoch (82), and Sheldon Adelson of Las Vegas Sands (LVS) (80).

While most investors might ask why a company should have a person past “retirement age” as a CEO, I decided to look at the short-term results of these companies led by these most experienced CEOs compared to the S&P 500.

Experience counts

As of August 19, 2013, Sonic Automotive outperformed the S&P in the past 12 months. Sonic rose about 30% versus around 15% for the S&P 500. Berkshire Hathaway (BRK-A), Warren Buffet’s company, has a similar outperformance with more than a 30% increase in the stock price.

Rupert Murdoch’s News Corp. (NWSA), which has seen tumultuous times in the past few years, has reemerged. Since the “old” News Corp. split into two entities: one the newly formed News Corp., and the other 21st Century Fox. Since late June when the new News Corp. went public, it has been relatively flat as has the S&P 500; the S&P is up about 2% and News Corp. down less than 1%. And few can doubt that there is a tougher CEO than Rupert Murdoch. He has been through many wars and short-term battles. In the end, he usually comes out ahead.

Finally, Las Vegas Sands, Sheldon Adelson’s company, has outperformed the S&P 500 in the past year. Las Vegas Sands is up more than 30% in 12 months.

Youth is the exception

As an executive talent management consultant for many years, I have seen that the norm for board rooms is to dig deep and look back and ask a simple question: “What CEO out there has been through this before?”

It leads me to a young CEO like Mark Zuckerberg being the anomaly, not the norm. This is not to say that Zuckerberg and others won’t perform and aren’t tough. After all, look how Zuckerberg and team have successfully fought back since Facebook’s (FB) IPO more than a year ago. The stock recently surpassed its IPO price.

It's about discipline

So, back to the experienced CEOs. Viacom (VIA) still has its faith in Sumner Redstone. P&G (PG) brought back Allen Laffley. The point is that there is safety in experience. Safety in experience for the workforce, and the investment community.

Now comes the new part. These CEOs have energy, and most work out. They are in great physical shape. Plus, while most CEOs of this ilk think they will live forever, they have always run their companies on borrowed time. They all have two great skills that seem at odds: discipline and impatience. Discipline keeps them on track. Impatience enables them to move ahead of the pace of the market and anticipate.

And, there is a third incredible part of these CEOs – they all have learning agility. In that regard, while they have deep experience, that is not all they rely upon. Their learning agility enables them to adapt experience, innate knowledge, and current information to anticipate the changing business environment. Each can quickly assess the current situation, absorb a vast amount of information, analyze it, and rapidly make decisions. In essence, they are faster than a computer, and more agile. All of these CEOs thrive on learning and adapt quickly to change.

So, for companies that want incredible energy to deliver short-term results and react ahead of the market, CEOs with deep experience at the helm might be the ultimate trump card.

Final case in point is that Dole’s (DOLE) 90-year old CEO, David Murdock, is seeking to take Dole Food private in a $1.2 billion deal to execute a turnaround in the private market. He probably has the energy, experience and know-how to remake the food icon.

This deal compares to Michael Dell seeking to take Dell private to remake the company in the private market. Seeing as Michael Dell is 48 years old, he probably has at least 40 years to make it a success. My bet is that he won’t take that long for the turnaround -- should the deal get done.

Robert A. Damon is President, North America for talent management firm, Korn/Ferry International. Mr. Damon has more than 25 years of experience in executive searches for CEO, COO, president, board director and general management positions.

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