Our exclusive study of the best performing young CEOs in the US shows the huge depth of leadership talent that is thriving in the country. The research, conducted by Eyitayo Quadri of Cass Business School, commissioned by CEO and sponsored by Boyden global executive search, evaluated the performance of those CEOs under 50 who were running US corporations between 31 May 2007 and 1 June 2008. Steve Coomber investigates the findings.
In a period of economic downturn, with its grinding lurch towards recession, our exclusive list of the top 50 CEOs under 50 provides evidence that the US is still a vibrant hub of driven, formidable leadership, characterised by excellent corporate performance that disregards any limiting notion of age, especially against slowing markets.
Of the CEOs in their 30s and 40s to make the list, the youngest is Francisco d’Souza, 39, of Cognizant, who ranks at number 31. Outside of youth, the study offers some interesting facts about the world these leaders operate in. Some CEOs, such as Jeff Bezos and Michael Dell, are founders of the company they run. Others, such as William Lauder of Estée Lauder, or August Busch of Anheuser-Busch, are carrying on a family tradition. Others still, like the number one CEO in the ranking, Nabeel Gareeb, have been headhunted on the strength of their career track record.
Good governance
The research also reveals a number of interesting findings about these comparatively younger leaders. Unsurprisingly, of the Fortune 1000 CEOs, who control a whopping value of $11.975.07bn of market share in the US, the majority (775) are over 50. Indeed, the average age across the whole sample was 55.43, with an age range from 34–85. While the over-50s made up 77.5% of the 1,000 CEOs, their companies controlled a disproportionate amount of the market share covered, at 85% of the total value.
And while the average market share controlled by each organisation and respective CEO is $11.97bn, the eligible group steer companies that control an average market share of $7.82bn, compared to their older counterparts, where the average market share their companies control is $13.18bn.
The industry spread was centred around certain key sectors. Silicon Valley and the technology industry are well known for the youthfulness of many leaders, and so it proved in this research. Consisting of IT, data, telecoms, materials and equipment, the technology sector features 33% of eligible CEOs.
At the other end of the scale, wholesale and general merchandise, entertainment and leisure, paper and printing, insurance, and auto services and parts, all remain bastions of the older guard with no representation from the under-50 generation.
The study also reinforced the lack of progress that women have made in breaking the glass ceiling to smash their way into the highest echelons of the corporate hierarchy. In 1,000 companies, there were just 24 female CEOs – or 2.4% if you prefer. Of these 24 CEOs, however, six were under 50, which is a surprisingly high proportion. In terms of industry sectors, over 50% of female CEOs appeared to be ‘typecast’, working in one of two sectors: speciality retailing or food and households.
The top female CEO aged under 50 was Andrea Jung, 49, (16th) who has been at Avon Products for over a decade and CEO since 2001. Jung did an excellent job for shareholders in terms of return on equity, producing an ROE of 74.6% during the research period.
First place
The highest ranking CEO on the list is Nabeel Gareeb, whose ranking is testament to his remarkable progress. Gareeb heads up NYSE-listed, Missouri-based MEMC Electronic Materials, a technology company that designs, manufactures and sells silicon wafers, and which was once based in California.
While Gareeb was not among the top 50 CEOs on market share, he was a decisive performer in other measures. He certainly appears to have kept investors happy, ranking third in return on assets (28.6%), second for return on invested capital (126.1%), and eleventh for return on equity (40.6%). He was strong in other metrics too, posting a sound 24.7% revenue growth figure (38th) and 123.7% (16th) for profit growth.
With a first degree in electrical engineering and an MSc in engineering management, Gareeb spent ten years in the industry gaining experience in a number of areas including operations, technology, and marketing, before working at power semiconductor supplier International Rectifier Corporation for ten years.
At International Rectifier Corporation he rose to the position of CEO, where he was responsible for worldwide operations, research and development, and marketing the company’s core products.
Headhunted to turn around MEMC after it had been bought by private equity firm Texas Pacific Group in 2001 and recapitalised, Gareeb was attracted by the opportunity to revive the fortunes of a company that pioneered silicon wafer technology. Initially he targeted four stakeholder communities, quoted in the St Louis Business Journal in 2003 as saying:
"For the shareholders, we want to continuously improve and deliver predictable results. For the customers, we’re working to exceed their expectations. For employees, we’re making sure they are proud to work for an industry leader. For suppliers, we want them to desperately want to do business with us."
Judging by Gareeb’s performance, as revealed by the study, and his forays into new markets such as the potentially attractive solar panel market, he certainly seems to be doing a good job on all four fronts.
Sector breakdown
Silicon Valley and the technology sector figure high on the list as centres of strong leadership. Heading up technology companies and making it into the top five rankings are Jen- Hsun Huang, 45 (2nd), CEO and co-founder of NVIDIA Corporation, the programmable graphics processors firm, and Paul Jacobs, 45 (4th), who runs Qualcomm, the digital wireless telecommunications company.
In terms of metrics, Huang also did well for his investors, ranking in the top 25 on ROA, ROIC, and ROE as well as a highly respectable 25th for profit and revenue growth. For Jacobs it was consistent performance across all metrics that propelled him into fourth, even though he ranked outside the Top 50 on a number of measures.
The other CEOs in the top five spots come from oil drilling and from a third party logistics firm. At number three, Hans Helmerich, 49, is president and CEO of Helmerich & Payne, an oil and gas drilling firm founded by his father in 1940. And John Wiehoff, 47, (5th) runs logistics firm CH Robinson Worldwide.
Governance
Another interesting finding was the changing attitudes towards governance evident among younger CEOs. The US is well known for favouring a governance model where the CEO and president/chairman is the same person.
In Europe and the UK, however, a dual role governance model is considered best practice. The CEOs aged 50 or under overwhelmingly favoured the dual role model. Of the 225 younger CEOs, 136 or 60.4% have a chairman to turn to for advice, guidance and oversight. Of the over-50s, however, only 36% are part of a dual role governance system.
Taken together, the various findings show a new generation of executives making CEO earlier than their predecessors and demonstrating capable performance once in the job. Interestingly, the youngest CEOs in the world, based on average age, come from China, the emerging economic superpower, as CEO magazine’s Global CEO survey in 2007 revealed.
Maybe the global economy that we operate in today and China’s willingness to allow executives aged 50 and under to run major corporations has set an example that other nations, including the US, are now beginning to follow.
