Financial TimesFinancial Times

The rising appeal for executives of having private equity owners

By Sujeet Indap

20 Feb 2023 · 18 min read

Editor's Note

An academic paper compared how chief executives are selected at private and public companies. Sujeet Indap, writing for the FT, considers the findings and questions which scenario is preferable.

Would it be better to be a chief executive who is accountable to Steve Schwarzman instead of Nelson Peltz? Schwartzman is the founder of the private equity juggernaut Blackstone which has made its name taking companies private in leveraged buyouts. Peltz’s Trian Partners, on the other hand, is known for activist campaigns at public companies. Most recently, Peltz pushed for change at Disney where CEO Bob Iger is now slashing 7,000 jobs among $5.5bn in annual cost cuts.

A recent academic paper explored the differences in how chief executives are selected at public and private companies. The study, from Paul Gompers, Steven Kaplan and Vladimir Mukharlyamov, noted that a previous paper had found that 72 per cent of S&P 500 CEOs studied between 1993 and 2012 were internal promotions. For a recent example, look to Amazon veteran Andy Jassy replacing Jeff Bezos in 2021.

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