The publication analyzed data from six publicly traded companies that “boomeranged,” or reappointed successful past CEOs over the last three years. Analysts found that although a former leader’s return can steady or even temporarily raise stocks in the short term, these CEOs are unlikely to renew lost gains over time. Collectively, the six companies — Dollar General, Walt Disney Co., Starbucks, DuPont de Nemours, Bausch & Lomb and Stitch Fix — lost $88 billion in market value in the six months before their reappointment announcements and had only recovered $10 billion half a year later.
Even if they aren’t entirely effective, the high number of reinstatements illustrates how difficult it can be to move away from a tenured CEO, according to Bloomberg. This is true amid high turnover in the healthcare industry: over the past year, a number of hospital CEOs have left retirement to guide their former organizations through difficult times.
The presence of a boomerang CEO may also indicate a shallow executive screening process, per the publication.
“Every boomerang CEO is a failed succession,” said Elena Botelho, a partner at leadership advisory firm ghSMART.
Read more about boomerang employment in the healthcare industry here.
