Tuesday, April 14, 2020
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CEO departures surged in 2019. CEO boomerangs might follow in 2020.
In late February, Bob Iger shocked the business world by announcing that he was stepping down as Disney (DIS) CEO, effective immediately.
Iger said he would stay on as executive chairman at Disney through the end of 2021, but emphasized that he would be focused on creative projects inside the company and not day-to-day operations.
In the seven weeks since this announcement many things have changed. Not the least of which is Iger’s role at the company.
Ben Smith at The New York Times reported late Sunday that Iger’s ride into the sunset has effectively been shelved. As Smith writes, “After a few weeks of letting [newly appointed CEO Bob] Chapek take charge, Mr. Iger smoothly reasserted control, BlueJeans video call by BlueJeans video call.”
Smith reports that Iger views this crisis as a chance to “permanently change” how Disney operates. These changes, Smith adds, may include altering Disney’s presence at advertising upfronts, ending the production of TV pilots that never air, re-opening with less office space, and potentially having fewer employees. (Iger, however, specifically challenged Smith’s reporting of staff reductions.)
What Iger’s return means for Disney is a fascinating discussion in its own right.
But the broader lesson for investors is that Iger will not be the only executive who thinks the same way about the future of their business as the crisis evolves away from a financial market panic and the reality that we’re facing an unemployment rate potentially north of 20% and a record decline in GDP growth settles in.
Anyone — be they an employee, an executive, a board member, an investor — thinking about the strategic direction of an industry or company is going to be re-thinking their assumptions in the weeks and months ahead.
Earlier this year, we chronicled the surge in CEO departures during 2019 and argued that it was a natural part of the economic cycle. Many executives who’d lead companies through the darkest days of the financial crisis were stepping back as the cycle matured and the business world appeared to be standing on broadly solid footing.
As BMO’s Brian Belski said at the time, the economic environment that prevailed in January and that seemed likely to be sustained for some time called for a growth mindset, not an austerity mindset. Executives who took the reins during the crisis needed to focus on efficiency and survival; the environment in early 2020 called for creativity and expansion.
Now, of course, we’re back on a crisis footing. And it might be time for a bunch of those recently-departed CEOs to come off the bench. We’ve already seen dozens of companies withdraw their outlooks for this year. Wall Street strategists and economists have ripped up their homework from the last year and started guessing at what the future holds. Who knows what boards of directors have in store for the months ahead.
The only prudent strategy right now is to remain flexible, make no solid plans, and be ready to change your mind at a moment’s notice. This doesn’t mean you can hold no views about the future. But all views must be loosely held.
As UBS economist Seth Carpenter said in an email on Sunday, “Our maintained assumption about the path of the virus is hugely uncertain, but you have to start somewhere to build a narrative. We assume the virus peaks this month, recedes over the course of May, and that mobility restrictions in the US are lifted in June. There are an infinite number of ways for that assumption to be wrong.”
And so whether you are thinking about the future of economic growth or the future of your business, investors right now must be ready for anything.
The range of potential outcomes for your career, your business, and your investments is as wide right now as it’s ever been. Regardless of your career stage, your assets under management, your industry, or your experience. Everything is on the table. Even in the C-suite.
What to watch today
6:30 a.m. ET: Johnson & Johnson (JNJ) is expected to report earnings of $2.13 per share on $20.48 billion in revenue
6:55 a.m. ET: JPMorgan Chase (JPM) is expected to report adjusted earnings of $2.14 per share on $29.52 billion in revenue
8 a.m. ET: Wells Fargo (WFC) is expected to report adjusted earnings of 55 cents per share on $19.42 billion in revenue
Other notable reports: Fastenal (FAST)
AstraZeneca to start trial on COVID-19 treatment drug [Yahoo Finance UK]
China’s trade fell less than expected even as virus spread [Bloomberg]
Grubhub, DoorDash, Postmates, Uber Eats are sued over restaurant prices amid pandemic [Reuters]
Gold’s powerful rally brings $1,800 into view [Bloomberg]
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