Even after Reckitt change, FTSE 100 CEOs still easily outlast Premier League football managers on average

“When he steps down at the end of August, Reckitt Benckiser’s Rakesh Kapoor will be the 20th longest-serving boss among the current FTSE 100 crop after eight years at the helm, compared to an average across the entire index of 5.4 years,” says Russ Mould, AJ Bell investment director. 

“Whether 5.4 years is really long enough remains open to question, given that the power of dividend reinvestment and compounding really starts to kick in after eight or ten years is open to doubt and investors in Reckitt will be concerned to see Mr Kapoor step down just over two years after the $17 billion purchase of Mead Johnson, a deal that is yet to fully prove itself in the eyes of some.

“Even so, 5.4 years at the top is a luxury that is afforded to very few managers in another results-driven industry, namely football. The average Premier League manager has currently been in his post for just 2.2 years and only two – Bournemouth’s Eddie Howe and Burnley’s Sean Dyche – have survived for longer than the FTSE 100 average.

Source: Company accounts, club websites, BBC Sport

“And Premier League chairmen look very tolerant compared to their wannabe-rivals in the lower echelons of English football, as managers there get even less time on average to build a winning team.

“The average tenure of a League One manager is currently just 1.6 years, while those in League Two have been in their post for 1.2 years and Championship gaffers have been in their post on average for just 411 days or 1.1 years.

Source: Company accounts, club websites, BBC Sport

“It is therefore possible to argue that the FTSE 100 boss gets a fair run at the job, but the pace of change at the top does seem to be accelerating. 

“The average number of changes across the index in a given year since 2000 is 12, yet 13 FTSE 100 firms changed their leader in 2017 and 16 in 2018, while 11 changes have already been announced this year and it is not even July (even if the timing of one departure remains open and two more are stepping down next year as part of an orderly succession plan).

Source: Company accounts and websites

“There are several possible explanations as to why turnover at the top seems to be picking up speed.

“In some cases it may be shareholder impatience, as may be the case with say Peter Plumb’s sudden departure from Just Eat, the sacking of Gavin Patterson’s at BT or the transition to Maurice Tulloch at Aviva after the removal of Mark Wilson last autumn.

“In others, it may be that a long-term CEO has simply decided it is time to hand over the reins, as could be argued was the case at Ashtead (after Geoff Drabble’s 12 years in the job), Direct Line (Paul Geddes after 10 years) and BAT (Nicandro Durante after eight years).

“It is also conceivable that some CEOs got out while the going was still good. You could certainly argue that was the case last year with Vittorio Colao at Vodafone, who stepped down after launching a major acquisition (which is still yet to close) and before a dividend cut. 

“The announcement of Mr Kapoor’s departure date and successor follows on from January’s declaration of his intention to retire by the end of this year.

“Investors will be wondering which of these categories best fits Mr Kapoor and what awaits his successor Laxman Narasimhan. The purchase of Mead Johnson in 2017 is still unproven and Reckitt looks increasingly accident-prone, after a cyber-attack, a scandal in South Korea and some disappointing sales growth figures.”