How long is too long to find a CEO?
The question has become important in tech-land as Twitter continues its hunt for a permanent chief.
The fact that the search has now stretched beyond 100 days elicited a chorus of indignation this week, as if the company had violated a sacred tenet of CEO searches.
But a look at some of the other tech company CEO searches of recent years shows that Twitter’s experience is not that unusual.
In some cases, the search for a new boss can take six months or longer.
We were able to identify 14 public CEO searches at tech companies that occurred during the past ten years, looking at companies in the Nasdaq 100 as well as big tech companies listed on the New York Stock Exchange, such as HP.
The list looks only at companies that publicly announced a CEO search — many companies conduct stealth searches, announcing the management change only after a successor has been selected.
Here's a breakdown of the typical timeframe for publicly announced tech CEO searches:
- 2 months or less: 4 companies
- 4 months: 1 company
- 5 months: 2 companies
- 6 months: 4 companies
- 9 months: 1 company
- 10 months+: 2 companies
By that yardstick, Twitter is still operating within acceptable bounds.
It's worth noting that there’s a difference between planned transitions, such as when an aging CEO announces plans to retire, and unexpected management changes like HP CEO Mark Hurd’s surprise resignation in 2010.
Planned retirements give a company the luxury of taking its time — in the most extreme case, former Cisco Systems CEO John Chambers announced his plans to retire 2.5 years before Chuck Robbins was appointed CEO in May!
But even companies with unexpected management changes, such as Symantec and Electronic Arts, can take six months to choose a new leader.
A public CEO search can be a painful process, as names of candidates inevitably leak to the press, investors weigh in with their wish list, and the company tries to consider outside candidates without alienating valued internal executives.
In Twitter’s case, the company says that former CEO Dick Costolo had begun planning to step down as far back as 2014. Yet when Costolo stepped down in June, Twitter had no successor lined up.
Instead the company tapped cofounder Jack Dorsey to serve as interim CEO while it conducted a search for a permanent leader. The board’s search committee has now been looking at inside and outside candidates for more than three months, with no indication that a decision is near.
Dorsey is considered a frontrunner, but the fact that he is also the CEO of digital payment company Square, which is said to be planning an IPO in the coming weeks, has complicated the situation. Meanwhile, the uncertainty has taken a toll on Twitter’s shares and on morale within the company.
One reason why investors may be anxious is because Twitter’s stock has taken a beating during its CEO search, down about 30%.
That’s more the exception than the rule.
Only 3 of the 14 companies saw their stock decline during CEO searches. Three companies saw their shares remain roughly the same and nine companies experienced a rise in their stock price.
Here’s a list of the various companies that have had CEO searches in recent years, along with whether they chose an insider or outsider for the job.
- Cisco: 2.5 years, insider, stock up
- Fiserv: 13 months, outsider, stock up
- Akamai: 9 months, outsider, stock roughly flat
- Electronic Arts: 6 months, insider, stock up
- CA Inc: 6 months, outsider, stock down
- Intel: 6 months, insider, stock up
- Symantec: 6 months, insider, stock up
- Microsoft: 5 months, insider, stock up
- Xilinx: 5 months, outsider, stock down
- Yahoo 2011/12: 4 months, outsider, stock up
- HP 2005: 2 months, outsider, stock up
- HP 2010: 2 months, outsider, stock down
- Yahoo 2008: 2 months, outsider, stock roughly flat
- Yahoo 2012: 2 months, outsider, stock roughly flat
