Change in leadership is inevitable. And all too often, it is associated with something negative: illness, a legal issue, shareholder discontent, or the Board’s lack of confidence in a leader. Often, as communicators, we are tasked with minimizing the disruption a leadership change causes. Just look when Tim Cook assumed leadership roles from Steve Jobs at Apple – investors reacted by pushing down company shares 5 percent, or nearly $20. It’s not always the case though. Sometimes, a change in leadership can add shareholder value and boost investor confidence.
But what are these stock moves really telling us?
That a company’s “intangible” assets – like a CEO’s reputation – have a major impact on its market value and impacts investors’ buying decisions. Just how valuable is it? One study put a $3 trillion dollar price tag on corporate reputation in S&P 500 companies alone. Just recently, when now ex-CEO of WellPoint, Angela Braly, stepped down, investors applauded and saw company shares gain 7.7 percent, worth almost $150 million in market value.
When I started in this business, there was a “rock star” CEO phenomenon that has fallen out of favor – and for good reason. But for many companies, the pendulum has swung too far the other way – CEOs, in a desire to appear humble, shy away from the spotlight and as a result are doing their shareholders a disservice.
CEO reputation translates into shareholder value. Could there be any greater reason to be proactive about cultivating and leveraging the profile of your CEO and leadership team?