The number of interim CEOs has grown markedly in recent years, according to research conducted by international public relations agency Weber Shandwick. And for the most part, they outperform their peers who hold the title on a permanent basis.
Last year, there were nine interim CEOs in place at major companies, a more than four-fold increase from 2003. And more than two-thirds (69 percent) of the 13 identified publicly traded companies led by interim CEOs since 2003 dramatically outperformed an index of peer companies by a median of 10.8 percent.
Despite the perception that these CEOs are primarily transient caretakers, Weber Shandwick’s analysis reveals that these executives’ performances may be vastly underestimated.
“The trend in interim CEO appointments is expected to continue,” says Micho Spring, chair of Weber Shandwick’s corporate practice. In 2006, several Interim CEOs have already taken the helm at high profile companies such as Gateway (Rick Snyder), Kelly Services (Carl Camden, now CEO), L-3 Communications (Michael Strianese), Radio Shack (Claire Babrowski), Wendy’s International (Kerrii Anderson) and Zale Corporation (Betsy Burton).
On average, an interim CEO’s tenure was 159 days or 5.3 months, with time spent in the corner office ranging from 59 to 300 days.
The firm’s research found that CEOs continue to depart at a rapid pace as corporate boards take more active roles in overseeing executive performance. As CEO tenures increasingly shorten and former CEOs depart unexpectedly, boards frequently find that successor CEOs are not identified or properly groomed for the chief executive position. Interim CEOs represent a smart solution until boards can find qualified successors or gain confidence in the Interim CEO’s leadership ability.
“Interim CEOs generally may deliver superior stock market returns because the market is rewarding the board’s decision to change leadership,” says Weber Shandwick’s chief reputation strategist and CEO expert Leslie Gaines-Ross. “Shareholders may experience relief that the company’s strategic direction is finally in new hands and that the short-term CEO will make the necessary tough decisions.”