Survey links CEO approval to stock performance
I tracked the stock performance of companies whose CEOs had the highest approval ratings versus those with the lowest. Guess what I found?
Updated August 21, 2008 at 11:02 AM PST with comments from Glassdoor's CEO.
Glassdoor.com uses an online questionnaire so employees can rate their companies and CEOs. I took the questionnaire. It's all the usual stuff, like what do you think of the leadership abilities and competence of senior management, would you recommend your company as a place to work, that sort of thing.
I thought it would be interesting to track the stock performance of the
public companies with CEOs that had the highest approval ratings versus those with the lowest approval ratings.
Guess what I found?
Over the past five years, shares of all the companies whose CEOs had the highest approval ratings were in the black, while shares of all the companies whose CEOs had the lowest approval ratings were either in the red or flat. We're talking 8 of 8 in the black, 8 of 8 in the red or flat.
What does that tell you?
First, that we live in America, the great land of greed and capitalism. If you're stock is in the money, the CEO's a god. If your options are under water, he's a dog. And don't flame me, it's what employees had to say, not me. But for what it's worth, I don't think that's a bad thing.
Second, I'm not sure if anybody really needs this Web site. I think it's just for employees to vent about things they have no control over because, thankfully, companies are not democracies and boards don't care one bit what employees think of their CEOs.
Glassdoor CEO and founder Robert Hohman certainly disagrees, "The people that really need this site are jobseekers! If you are interviewing at a company where there are issues raised about the culture or senior leadership, it is a strong indication that you should ask about it in the interview." Hohman goes on to say, "Glassdoor is not a vent site - to see content, you have to post content, which means that we receive postings from a much broader range of employees than just the disgruntled. We hear about the good, the bad, and everything in between."
In any case, don't be so surprised that boards of directors don't care what employees think. I'm not even sure they pay attention to shareholder approval ratings. If they did,would have been out on their cabooses the day after Yahoo's annual shareholder meeting.
Just so you know, this isn't the data I expected to find. I honestly thought I'd find some surprises in the survey results. But nope, it was all pretty much black and white. I guess that was the surprise.