When Dollar General brought back Todd Vasos for a second stint at the top earlier this month, it became the latest struggling household name to try to fix its problems by reappointing a successful former chief executive.
In the past three years, at least five other publicly traded US companies – Walt Disney, Starbucks, DuPont de Nemours, Bausch & Lomb and Stitch Fix – have reappointed, or boomeranged, former bosses during tumultuous times when their share prices were falling.
Dollar General is currently marred by worker safety issues, Disney was fighting an activist and struggling to navigate a streaming transition, Starbucks was battling a union drive and DuPont needed to cut costs.
Yet while such reappointments tend to steady or even jolt slumping stocks in the short term – Dollar General is up about 20 per cent since the Mr Vasos announcement – they rarely claw back lost gains.
The six companies collectively shed about $88 billion in market value in the six months before the reappointment announcements, but half a year later only $10 billion of that had been recovered, according to data compiled by Bloomberg. Triumphant examples like Steve Jobs at Apple are the exception, not the rule.
“Every boomerang chief executive is a failed succession,” Elena Botelho, a partner at leadership advisory firm ghSMART, said in an interview.
Badly managed C-suite transitions cost companies in the S&P 1500 an estimated $1 trillion in market value every year, according to a recent analysis in the Harvard Business Review.
The spate of reinstatements emphasises the difficulty of transitioning away from long-serving, successful bosses – like Disney’s recent boomerang of Bob Iger after his anointed successor, Bob Chapek, was ousted after less than three years.
They are tacit acknowledgements that the chosen heir was not up to the task, and while the formers can seem like a reassuring return to a safe pair of hands, the opportunity costs can include lost shareholder value and complicated successions if future leadership feels undermined.
“[Chief executives] are always walking on eggshells for the first couple of years, and now there’s increased likelihood that the guy who just handed over the reins to me might actually come back if I make a misstep,” Ms Botelho said.
Dollar General, Disney and DuPont declined to comment. Starbucks did not respond to a request for comment.
Boomerangs can sometimes reflect a superficial selection process, where a board is “seduced” by a charismatic, extroverted executive, Ms Botelho said, while conversely a more thorough process can net replacements like Microsoft’s Satya Nadella, who has overseen a $2 trillion surge in the company’s market value since his 2014 promotion.
There has been a broad increase in executive turnover this year with more than 1,400 chief executives stepping down, up almost 50 per cent from a year ago and the most since at least 2002, according to a recent report.
Companies with long-tenured chiefs face difficult successions, increasing the possibility they may boomerang.
Besides Warren Buffett – whose Berkshire Hathaway has been dogged by succession anxiety for decades – BlackRock’s Larry Fink and Regeneron Pharmaceuticals’s Leonard Schleifer are among the most tenured bosses of S&P 500 companies.
On average, the financial industry has the longest tenured leaders of any sector, leaving it primed for new chief executives.
How it works
Booklava works on a subscription model. On signing up you receive a free book as part of a 30-day-trial period, after which you pay US$9.99 (Dh36.70) per month to gain access to a library of books and discounts of up to 30 per cent on selected titles. You can cancel your subscription at any time. For more details go to www.booklava.com
Meatless Days
Sara Suleri, with an introduction by Kamila Shamsie
Penguin
Company%20Profile
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
MATCH INFO
Barcelona 2
Suarez (10'), Messi (52')
Real Madrid 2
Ronaldo (14'), Bale (72')
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UAE currency: the story behind the money in your pockets
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Globalization and its Discontents Revisited
Joseph E. Stiglitz
W. W. Norton & Company
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
