A company’s fortunes should never depend solely on who is at the top, however the quality of leadership is a key determinant in how a company performs, both on its balance sheet and on the stock market.
Mike Smith may have been heralded as a visionary leader of ANZ, but when it was announced Shayne Elliot would be taking over the reins, ANZ’s share price rose. ANZ is still the poorer cousin of the big four and Paul Rickard rates the banks like this:
- NAB
- CBA
- Westpac and
- ANZ
Already, Shayne Elliot has said he wants the bank to reduce its focus on Asia and concentrate more on the domestic mortgage market in order to move up the Big Four rankings. If he can do that, he will definitely become a CEO to be reckoned with.
Don Meij of Dominos Pizza is another ‘hero’ CEO who is often talked about. Don started as a pizza delivery guy and gradually moved up the ladder. He is very obviously passionate about pizza and his brand, and is devoted to the company and what it can deliver. Although expensive at a FY16 forecast PE of 47, everyone still loves the Meij story and the share price is rising.
Christine Holgate, CEO of Blackmores, understood the benefits of selling to China early on, and Blackmores share price has risen pretty much consistently since it hit $100 way back in August after a record annual profit. Holgate is a regular on Peter’s show on Sky News Business channel and her style of leadership is evident in her treatment of employees. In August she gave most of her 900 staff an extra six weeks’ pay on the back of the company’s record annual profit announcement. The company also has a profit share scheme, which gives 10% of profits back to its staff. Of course, it can work the other way too. The departure of Woolworths CEO Grant O’Brien in June was seen as the first step in a long restructuring process for the supermarket giant if it wants to catch up with Coles (Wesfarmers).
And then there are the inexplicable CEO movements. When it was announced in April that Ardent Leisure had appointed former magazine editor Deborah Thomas, its shares plummeted more than 19% in one day. Thomas replaced Greg Shaw, who served close to 13 years in the role. But while the market and some professional investors focussed on her magazine experience, and therefore her perceived lack of managerial experience, they neglected to take into account that Thomas had been with the company as a non-executive director since December 2013.
Thomas granted some interviews immediately after the announcement, but has since gone to ground – probably to concentrate on running a large listed company. And as the share price chart below shows, she hasn’t done too badly.
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