For all the positive attention they may bring to a company, “superstar CEOs” may be worth more trouble than they’re worth, writes David E. Adler for Institutional Investor magazine.
The trouble, writes Adler, is that when a chief executive achieves fame, it makes his/her post-honor performance poorer. According to a university study, stock value at companies where the CEO is given positive press and awards declined by an average of 60 percent over the next few years. Non-superstars, in contrast, found their companies’ value to decline by “merely” 45 percent.
“It is hard to disentangle why exactly superstar CEOs stumble so badly once they hit star status,” writes Adler. “Maybe they believe their own press, and at some point morph from a human to a brand, always a mistake.”
Such CEOs also found their pay increasing post-honor, magnifying the difficulties with having such a celebrated chief executive.