Proactive Investors - Run By Investors For Investors

Sage Group defenestration indicative of shortening shelf life of CEOs

Some CEOs have gone voluntarily, others have been jettisoned and we don't always know which is which. What we do know is that this year is seeing more CEO departures than is usual
Boss sign
Wrong tense, in many cases ...

FTSE 100 chief executives are beginning to know how top flight football managers feel in terms of job security.

Today’s abrupt departure of Stephen Kelly, the chief executive officer of The Sage Group PLC (LON:SGE), means that 16% of the companies in the FTSE 100 have jettisoned their chief executives this year.

READ: The Sage Group parts company with chief executive, Stephen Kelly

According to Russ Mould, the investment director at AJ Bell, only 2007 and 2013 have seen more changes this century, with 17 changes at the top among the UK’s corporate elite on each occasion.

“In some ways, this seems odd, as 2000 and 2007 were clearly difficult years and 2013 was testing for certain sectors,” Mould observed.

“The tech bubble burst in the first case and the Great Financial Crisis began in the second, ushering in a recession and a multi-year bear market in share prices in both cases. In 2013, three miners – Anglo American, Rio Tinto and BHP Billiton – all appointed new leaders as they looked to adapt to a new environment of lower commodity prices and shareholder calls for greater capital discipline and debt reduction,” he added.

Compared to big names such as Martin Sorrell (WPP), Adam Crozier (ITV), Moya Greene (Royal Mail) and Stuart Gulliver (HSBC), Kelly’s scalp is especially noteworthy.

READ Lloyds Banking and BT Group among the big names on the Investment Association's naughty step

Some of those big names have attracted the outspoken ire of shareholders whereas it appears that any misgivings about Kelly’s fitness to continue leading Sage were expressed behind closed doors.

Kelly lasted four years at Sage – Manchester United manager Jose Mourinho tends not to last even that long at most of his clubs – and to keep the football analogy going, there are few Sir Alex Fergusons and Arsene Wengers among the FTSE 100 bosses, with just 11 of the current FTSE chief executives (CEOs) enjoying stints at the top of more than 10 years.

According to Mould, “Kelly’s 46 months in office compare to the current average across the FTSE 100 of 62 (or 5.2 years)”.

“Perhaps this is a reflection of how the underlying economy is still sluggish and generally unhelpful and pressure from investors to perform is all the greater, especially as activist investors are getting results with several interventions in the UK,” Mould suggested.

View full SGE profile View Profile

Sage Group Timeline

Related Articles

Big Data
May 20 2019
The company provides data management and analytics services through RAPid, a platform that automatically extracts, aggregates, improves and organises data and documents
US dollars
January 14 2019
The growing company’s share price gained 90% last week on news of the cash injection.
lock
October 18 2018
Managed services revenue jumped 52% in the first half of 2018 with the order book standing at £2.4mln.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use