Unfortunately most companies, shareholders, and execs care about the stock performance the next quarter and that’s about it.
A neat compensation package for a CEO would be “What will the stock price be in a decade?” But you could never get a CEO to commit for a decade because they know like we all do that job hopping is how you make more money and get raises. The system is messed up all the way down.
> For instance, when we asked CEOs about the ideal tenure for the role, many mentioned the widely touted seven-year average. When we surveyed directors, they said that CEOs generally should leave the job after 9.5 years—a point at which, many believe, performance typically plateaus. Why these expectations? No one has a compelling or evidence-based answer. They are simply conventional wisdom.
The graph in that linked article is particularly telling as it shows performance increases all come after ten years.
Yes in large tech outside of FAANG. But that is only half the story. A lot of decision-making often falls on vice presidents, presidents, or heads assigned to subsidiaries or projects. They job hop a lot, more often than every 7 years in my experience.
Phil Harrison is a known FAANG example, but in smaller companies, there are tons of Harrisons. Stephen Elop is a FAANG-adjacent example, having been the CEO of Nokia in its downfall and now job-hopping quite a lot.
As a completely unrelated side-note, I love this quote from Elop's Wikipedia page:
> In his first speech at a Telstra conference in September 2016, Elop cited Nokia as an example of a "great" company that can self-assess and "transform" when necessary, referencing its success as a networks equipment supplier. He said that Telstra was also needing a necessary transformation to become more of a technology company. Elop was dismissed from Telstra as part of its restructuring on 31 July 2018.
A neat compensation package for a CEO would be “What will the stock price be in a decade?” But you could never get a CEO to commit for a decade because they know like we all do that job hopping is how you make more money and get raises. The system is messed up all the way down.
https://hbr.org/2019/11/the-ceo-life-cycle
> For instance, when we asked CEOs about the ideal tenure for the role, many mentioned the widely touted seven-year average. When we surveyed directors, they said that CEOs generally should leave the job after 9.5 years—a point at which, many believe, performance typically plateaus. Why these expectations? No one has a compelling or evidence-based answer. They are simply conventional wisdom.
The graph in that linked article is particularly telling as it shows performance increases all come after ten years.