Sunday, December 13, 2009

Does CEO Age Have an Effect on Stock Performance?

There may be an interesting correlation that warrants further study, the inverse relationship between the age of the CEO and the performance of the stock price. If you look at some of the major technology stocks, you will find that the higher the performance, the lower the age of the CEO. As a matter of fact, for tech stocks that have had returns of 55% or greater year-to-date, the average CEO age is 50. For stocks with lower returns, 55 is the average age.

As an example, Amazon's (AMZN) CEO, Jeff Bezos, is only 45 and his stock is up 147%. eBay's (EBAY) new CEO, John J. Donahoe, is 49 (according to Wikipedia), and the stock is up 55%. Yet if you examine IBM's (IBM) Sam Palmisano, who is 57, the stock is up a lot but doesn't beat the 55% threshold, returning only 51%. And Carol A. Bartz, who at age 60 is the CEO of Yahoo (YHOO), had a return of only 22%.

The following chart compares the CEO ages of Amazon (AMZN), Apple (AAPL), Google (GOOG), eBay (EBAY), IBM (IBM), Microsoft (MSFT), Hewlett Packard (HPQ), and Yahoo (YHOO).

If you like interesting correlations, check out the article on the Revenues per Employee Ratio.

Author owns AMZN, AAPL, EBAY, MSFT, and YHOO.


1 comment:

UltimateToyGalaxy said...

Interesting analysis... There possibly may be a correlation with CEO age and stock performance. But, I think there has to be more data sample to make this point stronger. Good luck!

Michael from