Eddy Elfenbein, commenting on the market reactions to Hurd leaving HP then showing up at Oracle:<\/p>\n
But an interesting question is, how much does a CEO really add to a company’s business? When you get right down to it, I don’t believe it’s that much. Steve Jobs, sure. But others, I’m not so sure. I think culture and where the firm and industry are in their life-cycle can also be very important.<\/em><\/p>\n
By my judgment isn’t what counts, it’s the market’s and Oracle’s market value has increased by $8 billion today. Henry Blodget notes that that’s about half of the $14 billion that HPQ lost when they fired Hurd. <\/em><\/p><\/blockquote>\n
Elfenbein makes a good point about the market value impact of Hurd’s departure and arrival.\u00a0 Not so much about his personal sentiment that CEOs are not worth “that much,” although he expresses a widely held sentiment.<\/p>\n
Those market value changes he cites–$14 billion drop at HP and $8 billion gain at Oracle–imply that Hurd is worth about one percent per year in return on capital to those respective organizations (Oracle happens to be about 8\/14ths the size of HP).\u00a0 Is it possible that a CEO besides Steve Jobs can make a one percent difference in a company’s return on capital.\u00a0 Anyone who really doubts this (once they have the numbers in front of them) is pretty clueless about business and management.<\/p>\n
In a rational world, knowing the reality of how much the best versus the next-best CEO can be worth should eliminate the deep concern of couch-bound critics about whether or not the board should have “given away” that last few million to keep the boss.<\/p>\n
HT:\u00a0 John McCormack<\/p>\n","protected":false},"excerpt":{"rendered":"
Eddy Elfenbein, commenting on the market reactions to Hurd leaving HP then showing up at Oracle: But an interesting question is, how much does a CEO really add to a company’s business? When you get right down to it, I don’t believe it’s that much. Steve Jobs, sure. But others, I’m not so sure. I […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,25],"tags":[],"class_list":["post-2718","post","type-post","status-publish","format-standard","hentry","category-executive-compensation","category-reporting-on-pay"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/2718","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=2718"}],"version-history":[{"count":5,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/2718\/revisions"}],"predecessor-version":[{"id":2723,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/2718\/revisions\/2723"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=2718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=2718"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=2718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}