Who would be a CEO?

Becoming Chief Executive of a listed company has long been viewed as the ultimate aspiration for ambitious and committed individuals in the corporate world. The role brings prestige, significant financial reward, in some cases profile and, in all cases, the responsibility for setting strategy, leading the workforce and ultimately delivering results that (at least) meet the expectations of the company’s stakeholders.

And while sympathy for CEOs might generally be in short supply, it is worth pausing to consider the scale of the challenges they face.

The sheer breadth of stakeholders that a CEO needs to engage, build relationships with, and manage, is vast. Colleagues, shareholders, research analysts, government, regulators, media, NGOs, proxy agencies, climate groups and more. The interests of these groups can differ markedly, and the use of social media and other digital channels means it’s easier for dissenting voices to cut through – and quickly.

Then there is the running of the business itself. Leading any business is challenging. But the cumulative effect of so many recent seismic events such as the pandemic and global conflicts have had profound personnel, financial and operational ramifications on all types of businesses, public and private, around the world.

However, disclosure obligations have arguably made the challenge even greater for the listed community. At a high level, listed companies in the UK are required to ensure that investors are operating on sufficiently accurate public information in order to trade the shares. This means that companies need to be comfortable that they are not in receipt of any “inside information”, which would be used by a reasonable investor of part of the basis of their investment decisions. This can be a highly complex consideration at times of market and geo-political turmoil.

At such times, it is also often the case that we see severe movements in the share prices of listed companies.

This naturally leads to the subject of guidance. The provision of future guidance to the analyst and investor community is a staple of the listed company ecosystem. For CEOs, and CFOs, it is the mechanism through which they can manage the market’s expectations on the future financial performance of the business. Guidance needs to be viewed as being stretching but achievable, and the credibility of a CEO can rest on whether they “meet or beat” it on a consistent basis.

Considering the macro and geo-political events referenced above, the provision of guidance has been fraught with challenge in recent years. We only have to look to the recent earnings results season, which coincided with the introduction of US tariffs, to see the impact. Carmakers, airlines and retailers were all among those who withdrew or downgraded their guidance given the inherent uncertainty.

If the provision of guidance can be deemed tactical, critical stakeholders also scrutinise the longer term, strategic components of a CEO’s performance. Activist investors are now an established cohort of the investment community, and no company is too big to be off limits. A public challenge to a CEO’s strategy and/or performance levels can be hugely time consuming, acutely stressful and fatally damaging.

And if that’s not enough, CEOs of companies whose share prices are under pressure, will be all too aware that there will likely be a raft of competitors and private equity firms running the rule over them as a potential acquisition target at any given time.

The challenges are real, and they are sizeable. And while Chief Executives are unlikely to garner sympathy, there can be little doubt that their roles are more complex and more challenging than ever.

In this context, communicating effectively to key stakeholders should be a priority for any CEO. Through using a core narrative consistently through all their communications, and remaining visible, CEOs can demonstrate that they are controlling the controllables, and that their companies remain well placed to ride out the storm and ultimately win in their respective markets.

If you’re interested in discussing this further, please contact Doug Campbell, Managing Director in Prosek’s London office to learn more: dcampbell@prosek.com