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12 th February 20131 High Pay Centre – 12 th February 2013 Global CEO Appointments: A Very Domestic Issue David Bolchover
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12 th February 20132 Contents Methodology Study purpose Executive summary Region by region Miscellaneous facts Significance of results
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12 th February 20133 Methodology Study of 2012 Fortune Global 500 Information available on 489 CEO career histories Study conducted Sept-Oct 2012 If no CEO, looked at predecessor CEO defined as executive head External = outside company
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12 th February 20134 Survey significance Does an international talent market for CEOs really exist? Key plank of high executive pay justification United States data particularly important “We are a worldwide company; we are the leading company in our industry. The comparison, whether you like it or not, is with other companies in the world.” Sir Martin Sorrell, CEO, WPP, 2011
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12 th February 20135 Executive summary 4 existing CEOs poached across borders : 0.8% 1 existing CEO poached across regions: 0.2% 14 international hires from below top: 2.9% North America: not one CEO from abroad Nor Japan, Latin America or Eastern Europe 80% CEO appointments are internal hires 32 existing CEOs poached in total:6.5% International CEO market extremely limited
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12 th February 20136 CEO appointments – at a glance Number of companies Internal hireDomestic external hire (not CEO) Domestic external hire (CEO) External hire from abroad (not CEO) External hire from abroad (CEO) North America14212413500 Western Europe1531101612114 China61*4013710 Japan69680100 Rest of Asia33293010 Eastern Europe954000 Latin America13102100 Australia960210 Total4893925128144
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12 th February 20137 North America: Staying home n = 142 No CEO recruited from abroad 87% CEOs promoted internally 5 CEOs (3.5%) poached while CEOs Only 1 poached while CEO since 2007 13 CEOs recruited from below top tier
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12 th February 20138 n = 153 72% CEOs promoted internally 11 (7.2%) non-CEOs recruited from abroad 8 non-CEOs recruited from North America 4 (2.6%) existing CEOs poached from abroad Peugeot Citroen – Philippe Varin (2009) Holcim – Bernard Fontana (2012) International Airlines Group – Willie Walsh (2005) Bayer – Marijn Dekkers (2010) Western Europe: Trickling across the pond
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12 th February 20139 China: From state to state n = 61 (11 career histories unavailable) 66% promoted internally If state one employer, then only two external appointments Noble Group - Yusuf Alireza (from abroad, 2012) China Merchants Bank - Ma Weihua
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12 th February 201310 Japan: Decades on a ladder n = 69 Just one external appointment Japan Post – Jiro Saito (2009) One company men Average public company salary: $560,000 (PwC)
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12 th February 201311 Rest of Asia: More introspection n = 33 (South Korea, India, Taiwan dominate) Only four recruited externally, all non-CEOs Of these, three were domestic One non-CEO recruited from abroad S-Oil – Nasser Al-Mahasher (2012)
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12 th February 201312 Eastern Europe: Putin’s boys n = 9 All hired domestically Four hired externally, all non-CEOs Three external hires Putin associates Gazprom – Alexey Miller Rosneft – Igor Sechin Sberbank – Herman Gref
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12 th February 201313 Latin America: Impregnable borders n = 13 (Brazil dominates) All hired domestically Three recruited externally, including one existing CEO
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12 th February 201314 Australia: some musical chairs n = 9 3 recruited externally 2 existing CEOs hired domestically 1 non-CEO recruited from abroad A & Z Banking Group – Mike Smith
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12 th February 201315 Miscellaneous facts 18 CEO/founders (incl 7 in US) 13 CEO women (2.6%) 9 women CEOs in US, 1.1% in rest of world CEO mean average age: 57.2 Highest average age: Japan (62.5) Lowest average age: Eastern Europe (51.1) Youngest CEO: John Elkann (36), Exor Oldest CEO: Paul Desmarais Snr (85), Power Corp
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12 th February 201316 Significance of results International hiring minimal (3.7%) Some European recruitment of US non-CEOs (5.2% of regional total) United States reject cross-border hires International CEO salary benchmarking pointless Overwhelming majority promote internally Even domestic benchmarking in many regions is of limited value Ambitious internal candidates likely to accept job anyway Little risk of poaching Despite rhetoric, CEO talent not viewed as rare International CEO talent market overplayed – self-interest?
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