With Procter & Gamble announcing the return of former CEO AG Laffley, we look at previous CEOs who came back and how their stocks did after their run.
Apple did it. Google did it. Starbucks did it. Dell did it. Now Proctor & Gamble is doing it.
The consumer goods giant is dusting off their old CEO and bringing him out of retirement. Procter & Gamble announced yesterday that former CEO AG Lafley will replace his replacement, Bob McDonald, at the helm of the company. Lafley retired in 2009 but McDonald’s performance was widely criticized.
Since McDonald took over, the stock rose 54%, underperforming the S&P 500. Last year, the 175 year-old P&G sold $83.7 billion worth of skin products, deodorants, toothpaste, and many other things found in your bathroom or kitchen.
Many companies have had their old CEOs come back after their replacement had a tough time.
Most famous of all was Steve Jobs’ 1993 return to run Apple, the company he founded, after John Sculley’s troubled ten-year tenure as CEO. Though Apple’s stock price quadrupled in a decade from its 1984 prices with the former Pepsi exec Sculley running things, Jobs return meant better returns for shareholders. His second run was good for an additional 6,355% for Apple shares until his passing in 2011.
Google’s Larry Page also returned to the role of CEO after handing Google over for a decade to former Novell CEO Eric Schmidt (Schmidt also served on the board of Apple). The company’s stock was down 19% from its IPO when Schmidt was replaced by Page in 2011. Since then, it has gone up 66%. Schmidt continues to play a senior role at Google and continues to advise Page and fellow co-founder Sergey Brin.
Caffeine addicts around the world will be happy to tell you that Howard Scultz’s return to Starbucks was the best thing to happen to the company. Schultz ran the company for 13 years until stepping down as CEO at start of the millennium. The company’s stock went up over 10 times since its 1992 IPO. From 2000 to 2006, the stock ran up to nearly $38 per share only to collapse to below $9 in 2008, the same year Schultz returned. Shares are up over 212% this time around with Schultz.
Not all works out for ex-CEOs who come back to their old jobs. Michael Dell started Dell assembling computers in his college dorm room but stepped down as CEO in March, 2004. From the IPO to Dell’s resignation, the stock went up over 36,350% (A drop for those who bought in the 2000 tech bubble when Dell was up 56,300%). Over the three years that followed, Dell’s stock went down 27.7%. Dell’s return in early 2007 hasn’t done much good for the stock, and has gone down an additional 33%.
So, is this a gamble for Procter & Gamble? Will bringing back a CEO give the company returns like Apple, Google, and Starbucks? Or will it fall flat like Dell?
We ask Abigail Doolittle, Technical Strategist at The Seaport Group, and JC O'Hara, Chief Market Technician at FBN Securities, to give their take. See the video above to hear their analyses.