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.
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GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
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Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
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UAE currency: the story behind the money in your pockets
The specs: 2018 Nissan Altima
Price, base / as tested: Dh78,000 / Dh97,650
Engine: 2.5-litre in-line four-cylinder
Power: 182hp @ 6,000rpm
Torque: 244Nm @ 4,000rpm
Transmission: Continuously variable tranmission
Fuel consumption, combined: 7.6L / 100km
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Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
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Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
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On sale: Now
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
2019 ASIA CUP POTS
Pot 1
UAE, Iran, Australia, Japan, South Korea, Saudi Arabia
Pot 2
China, Syria, Uzbekistan, Iraq, Qatar, Thailand
Pot 3
Kyrgyzstan, Lebanon, Palestine, Oman, India, Vietnam
Pot 4
North Korea, Philippines, Bahrain, Jordan, Yemen, Turkmenistan
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Sheffield United 2 Bournemouth 1
United: Sharp (45 2'), Lundstram (84')
Bournemouth: C Wilson (13')
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Our Time Has Come
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Mohammed bin Zayed Majlis
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
Three ways to boost your credit score
Marwan Lutfi says the core fundamentals that drive better payment behaviour and can improve your credit score are:
1. Make sure you make your payments on time;
2. Limit the number of products you borrow on: the more loans and credit cards you have, the more it will affect your credit score;
3. Don't max out all your debts: how much you maximise those credit facilities will have an impact. If you have five credit cards and utilise 90 per cent of that credit, it will negatively affect your score.
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.