FORTUNE APRIL 2020 29INVESTOK Boomerang
When former leaders return to their old companies
for “boomerang” stints as CEOs, the rust often
shows—and shareholders suffer. BY RYAN DEROUSSEAUEDWARD BREEN’S four-year tenure
heading DuPont was one for
the corporate history books. He
reshaped the centuries-old industrial
giant through a series of acquisitions,
including a merger with Dow Chemi-
cal. Then he engineered the slicing
of $86 billion DowDuPont into three
separate public entities.
In June 2019, after the splits were
finalized, Breen relinquished the CEO
role, becoming chairman of DuPont
de Nemours, the newly formed spe-
cialty chemical company. But shares
in the new DuPont soon tanked, as
weak demand for auto parts and U.S.-
China trade tensions ate into earn-
ings. The board’s solution? Bring back
Breen. He’s CEO again, as of Feb. 18.
It’s a common tactic among com-
panies in dire straits: rehiring an old
friend. CEOs who return for a second
stint don’t have a learning curve, the
thinking goes, and maybe they can
spark magic. The iconic example is
Steve Jobs, who famously came back
to Apple, the company he founded,
after 12 years away and transformed
the computer maker into the world’s
most valuable company.
But Jobs was an exceptional
leader—and for second-time-around
CEOs, success is more the exception
than the rule. That’s the conclusion
of researchers at the University of
North Carolina who tracked “boo-
merang CEOs.” In a recent study, the
authors reviewed 6,429 CEOs who led
S&P 1500 companies between 1992
and 2017, and found 167 cases when
a former CEO ricocheted back to the
head role. Executives who went from
CEO to co-CEO and back at the samecompany were counted as
boomerang leaders.
In general, investors
would have been better off if
the boomerang hadn’t come
back. Companies with such
CEOs garnered annualized
stock returns (including
dividends) that were, on
average, 10% lower than
those of non-boomerang
companies. Their shares
also lagged their industries.
What accounts for the
disappointing reunions?
Some boomerang CEOs
returned under unusually
tough conditions. A.G.
Lafley of Procter & Gamble
and Steve Ells of Chipotle
each enjoyed great runs
in the 2000s, then were
overmatched by new crises
(e-commerce and E. coli,
respectively) in second
stints in the 2010s.
But rehiring a familiar
face is often a sign of broad-
er management dysfunction.
“It’s a failure of CEO succes-
sion planning,” says Travis
Howell, a researcher on the
study. Companies bring in
ex-chiefs in part because
they have no one else to turn
to. (The numbers also show
yet another sign of gender
imbalance in the C-suite:
Only two of the 167 boomer-
ang CEOs were women.)
Boomerang CEOs are
also unusually likely to be
founders. Founders madeTHE BRIEFShares in Michael Dell’s
eponymous company
soared during his first
stint as CEO ...ROUND 1THIS^PAGE:^ ROBERT^ DAEMMRICH^ PHOTOGRAPHYINC/SYGMA—GETTY^ IMAGESINV.W.0420.XMIT.indd 29 FINAL 3/9/2020 12:53:42 PM