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High Pay Centre – 12 th February 2013

High Pay Centre – 12 th February 2013. Global CEO Appointments: A Very Domestic Issue David Bolchover. Contents. Methodology Study purpose Executive summary Region by region Miscellaneous facts Significance of results. Methodology. Study of 2012 Fortune Global 500

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High Pay Centre – 12 th February 2013

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  1. High Pay Centre – 12th February 2013 Global CEO Appointments: A Very Domestic Issue David Bolchover

  2. Contents • Methodology • Study purpose • Executive summary • Region by region • Miscellaneous facts • Significance of results

  3. Methodology • Study of 2012 Fortune Global 500 • Information available on 489 CEO career histories • Study conducted Sept-Oct 2012 • If no CEO, looked at predecessor • CEO defined as executive head • External = outside company

  4. Survey significance • Does an international talent market for CEOs really exist? • Key plank of high executive pay justification • United States data particularly important “We are a worldwide company; we are the leading company in our industry. The comparison, whether you like it or not, is with other companies in the world.” Sir Martin Sorrell, CEO, WPP, 2011

  5. Executive summary • 4 existing CEOs poached across borders : 0.8% • 1 existing CEO poached across regions: 0.2% • 14 international hires from below top: 2.9% • North America: not one CEO from abroad • Nor Japan, Latin America or Eastern Europe • 80% CEO appointments are internal hires • 32 existing CEOs poached in total:6.5% International CEO market extremely limited

  6. CEO appointments – at a glance

  7. North America: Staying home • n = 142 • No CEO recruited from abroad • 87% CEOs promoted internally • 5 CEOs (3.5%) poached while CEOs • Only 1 poached while CEO since 2007 • 13 CEOs recruited from below top tier

  8. Western Europe: Trickling across the pond • n = 153 • 72% CEOs promoted internally • 11 (7.2%) non-CEOs recruited from abroad • 8 non-CEOs recruited from North America • 4 (2.6%) existing CEOs poached from abroad • Peugeot Citroen – Philippe Varin (2009) • Holcim – Bernard Fontana (2012) • International Airlines Group – Willie Walsh (2005) • Bayer – Marijn Dekkers (2010)

  9. China: From state to state • n = 61 (11 career histories unavailable) • 66% promoted internally • If state one employer, then only two external appointments • Noble Group - Yusuf Alireza (from abroad, 2012) • China Merchants Bank - Ma Weihua

  10. Japan: Decades on a ladder • n = 69 • Just one external appointment • Japan Post – Jiro Saito (2009) • One company men • Average public company salary: $560,000 (PwC)

  11. Rest of Asia: More introspection • n = 33 (South Korea, India, Taiwan dominate) • Only four recruited externally, all non-CEOs • Of these, three were domestic • One non-CEO recruited from abroad • S-Oil – Nasser Al-Mahasher (2012)

  12. Eastern Europe: Putin’s boys • n = 9 • All hired domestically • Four hired externally, all non-CEOs • Three external hires Putin associates • Gazprom – Alexey Miller • Rosneft – Igor Sechin • Sberbank – Herman Gref

  13. Latin America: Impregnable borders • n = 13 (Brazil dominates) • All hired domestically • Three recruited externally, including one existing CEO

  14. Australia: some musical chairs • n = 9 • 3 recruited externally • 2 existing CEOs hired domestically • 1 non-CEO recruited from abroad • A & Z Banking Group – Mike Smith

  15. Miscellaneous facts • 18 CEO/founders (incl 7 in US) • 13 CEO women (2.6%) • 9 women CEOs in US, 1.1% in rest of world • CEO mean average age: 57.2 • Highest average age: Japan (62.5) • Lowest average age: Eastern Europe (51.1) • Youngest CEO: John Elkann (36), Exor • Oldest CEO: Paul Desmarais Snr (85), Power Corp

  16. Significance of results • International hiring minimal (3.7%) • Some European recruitment of US non-CEOs (5.2% of regional total) • United States reject cross-border hires • International CEO salary benchmarking pointless • Overwhelming majority promote internally • Even domestic benchmarking in many regions is of limited value • Ambitious internal candidates likely to accept job anyway • Little risk of poaching • Despite rhetoric, CEO talent not viewed as rare • International CEO talent market overplayed – self-interest?

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