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Who becomes CEO in a pandemic?

Good morning.

Who becomes CEO in a pandemic? COVID seems to have caused corporate boards to become more conservative in their searches, at least in the short term, according to a report out yesterday from Heidrick & Struggles. An analysis of 965 CEOs of the world’s largest companies found there were notably fewer new CEOs appointed between March 11 and June 30 than during the same period last year. 

In the U.S., for instance, there was only one new CEO reported, compared to seven in the same period in 2019. Diversity also fell, with women accounting for only 3{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} of all new CEO appointments, compared to 12{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} in the five months leading up to the pandemic. And external appointments rose, accounting for 57{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} of the new CEOs appointed between March 11 and June 30, compared to 35{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} in the five previous months. Some 63{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} of the new CEOs had previous experience as CEOs—something true of only 44{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} of those named in the prior five months.

While the unique challenges of 2020 drove boards to seek experienced executives to fill the top job, CEOs also made clear that the demands of the job changed dramatically. McDonald’s CEO Chris Kempczinski, for instance, said “one of the necessary parts of leading through the pandemic has been having a sense of humility… You need to have empathy to understand how people are feeling and to be able to adjust your style to the myriad of ways they process.” 

Dr. Johannes Bussmann, CEO of Lufthansa Technik, said the CEOs have had “to be proficient in a variety of virtual and face-to-face interactions. Their constant presence in their employees’ lives creates a level of personal closeness with the CEO not seen before.” You can read the entire report here.

Separately, Allstate CEO Tom Wilson called to report he had completed a $1.2 billion bond deal using only minority, women and veteran bankers—the largest corporate bond offering ever done exclusively by so-called MWVBEs. Those firms currently handle only 4{ce8ce7cc98bffdc4302011057a79600ea02c464c5536f1477c12acdb8bd79c00} of corporate investment-grade bond issues. Wilson said he has called on the CEOs of a number of other firms to do similar deals. “This is not just pledging, it’s acting,” he said. “We just need to take a stand and do things differently” to create more equity in securities markets.

More news below.

Alan Murray

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