The resignation of Pope Benedict XVI got me thinking about the issue of people who linger for years at the top of organizations, including corporations. Is long tenure at the top a good thing or a bad thing?
Based on a quick study I did this week on long-tenured CEOs, I would say it's indeed beneficial to returns. Here is a list of 10 chief executives who have been in office for 35 years or more, along with the year they started.
On Bloomberg, I looked up the total return for each of these stocks in the 10 years through Jan. 31, 2013, including reinvested dividends. The results speak well for long-lived CEOs. On average these companies returned 377% in the past decade, compared with 114% for the S&P 500 -- and, individually, seven of the 10 outperformed the benchmark for the 10-year period.
The biggest winner was Healthcare Services (HCSG), where Daniel McCartney has been at the helm for 35 years. The Bensalem, Pa., company provides housekeeping, laundry and linen to hospitals, nursing homes and other healthcare facilities. Its stock was up 1,118% for the 10 years ended January.
Watsco (WSO) was next with a 580% return. Based in Coconut Grove, Fla., the company distributes heating, air conditioning and refrigeration equipment. Albert Nahmad has been CEO since 1973. Two other companies posted returns of more than 400%: Comtech (CMTL), which returned 481%, and J&J Snack Foods (JJSF), which provided a 458% return.
One company, Tootsie Roll (TR), was up 46% but trailed behind the S&P 500, and just two of the 10 companies were down for the decade. Forest Labs (FRX) came in at negative 30%, and Scholastic (SCHL) lost 11% of its value.
So let's hear it for longevity at the top. If any readers have their own additions to the list of long-tenured CEOs, I would welcome them -- I may someday do a second iteration of this study.
John Dorfman is chairman of Thunderstorm Capital LLC, a money management firm in Boston. He can be reached via email here.
