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CEO performance measured by share price

Published on July 10, 2012 by in Bell, Rogers, TELUS, Wireless

CEO performance measured by share price

Sometimes new leaders can re-invigorate a business, find low nagging fruit and produce superior returns.  Sometimes financial performance improves, sometimes a new executive is just lucky on timing.  In the blog we will measure only one thing: Share price increase from the week before until now measured against peers and similar companies.  Below is the summary table which shows each company’s share prices percentage increase compared with the average of the four (Bell, Rogers, Shaw and Telus) during the tenure of the current CEO.  It also shows the company’s performance compared with the other companies during their tenure.

 

Difference from Cope Mohamed Brad Shaw Entwistle
Average

1.03%

-21.07%

-23.80%

9.45%

 
Bell

0.00%

-51.48%

-36.69%

-7.07%

Rogers

20.55%

0.00%

-12.06%

-29.26%

Shaw

16.36%

26.97%

0.00%

45.85%

TELUS

-32.81%

-59.76%

-46.46%

0.00%

For a more detailed look, we will go alphabetically by company:

BCE: George Cope

George Cope became CEO on July 4, 2008.   After 4 years, many acquisitions including Virgin, The Source, CTV, MLSE (1/2) and Astral Media.  Bell has also laid off thousands of employees, increased dividends many times and in total BCE has increased revenue from $17.7bn to $18bn over three years (CAGR 0.51%), all resulting in a share price increase of 15%.  By comparison, TELUS enjoyed a 48% increase in share price during the same period.  During the same period of time, Rogers had negative 5% increase in share price while Shaw was pretty much flat with a 1% decrease over the same period.    In the eyes of investors, BCE took value from Rogers and TELUS took value from all.  One might argue that BCE’s share price was high at the time he took the helm because of the pending closure of the privatization, but that did not happen.  If you measure George Cope from the point just after the privatization collapsed (Dec 19, 2008), the share price increase would be significantly better at nearly 100%, (TELUS 75%, Rogers 14% and Shaw at -8%), but then BCE did use unpaid dividends during the strategic review to increase dividends afterwards.

Bell Share price vs peers during Cope Tenure

Bell Share price performance vs peers during George Cope tenure

Rogers: Nadir Mohamed

Nadir Mohamed became CEO on April 4, 2009.  Since then he has restructured the cable and wireless businesses into one division, expanded media and acquire the other half of MSLE.  Under his leadership Rogers have taken fewer big bets, but have be consistent in delivering financial results if not subscriber results.  Recently Rogers started cost cutting, it seems to make Bay street happy, but even this has not allowed his share price to shine.  During his time in office, Rogers has increased it share price by a very reasonable 27.37%, which seems like a lot compared with Shaw who were again almost flat at 0.85% decrease.  But BCE had a stock increase of 68.34% and TELUS of 79.56%, over the same time period clearly marking a shift from cable company to telephony.  Note that from when Ted Rogers passed away to when Nadir Mohamed took the helm, the stock had already dropped 15%.

Rogers share price performance vs peers during Nadir Mohamed tenure as CEO

Rogers share price performance vs peers during Nadir Mohamed tenure as CEO

 

Shaw Communications:  Brad Shaw

Brad Shaw always had a tough act to follow, after his older brother Jim grew the business almost 10 fold during his tenure.  Brad Shaw cancelled wireless, instead focused on wifi and faster deployment of new set-up boxes.  During his relative short tenure, he has increased cable sales by 4% and profit by 2%.  There have also been a steady flow dividends, by increasing the payout ratio to around 85%.  Since Brad Shaw took the helm, the Shaw share price has declined 8.77%.  At the same time Rogers has increased their share price by 2.79% despite losing the wireless advantage to TELUS and Bell during this time frame.  BCE has increased 27.3% and TELUS has increased 37.82% showing a strong swing away from Shaw towards TELUS during Brad Shaw’s leadership.

Shaw share price performance vs peers during Brad Shaw tenure as CEO

Shaw share price performance vs peers during Brad Shaw tenure as CEO

TELUS: Darren Entwistle

In the 12 years that Darren Entwistle has led TELUS, much has changed.  Their wireless business has grown from strength to strength, their emerging TV business is easily taking back customers previously lost to Shaw and their acquisition strategy, unlike the others has been focused outside media.  In the last three years, they have acquired two healthcare related businesses in Emergis and more recently Wolf.  They also acquired Black’s to improve their wireless distribution.  There has been less focus on mass layoffs and cost cutting for the sake of it.  Revenue CAGR has been 4% in the last 7 years and EBITDA 2%, but most of this is organic growth rather than the acquisition fueled growth of Shaw, BCE and Rogers.  During Darren Entwistle’s time in office, the share price has increased a healthy 53.72%, but Rogers has increased nearly 83% in the same time frame.  Shaw grew 7.87% during this time.  (Note that BCE’s data only starts in 2006 for the purpose of this comparison.)

TELUS share price performance vs peers during Darren Entwistle tenure as CEO

TELUS share price performance vs peers during Darren Entwistle tenure as CEO

 

Conclusion

In terms of overall share price performance, Darren Entwistle is the clear leader, but then he has been in his role longer and there were times when his share price was under water.  On the other end of the spectrum, Brad Shaw is still struggling to find his feet in terms of share price performance versus peers.

Overall all these companies have increased their dividends significantly faster than the companies have grown or their profitability improvements.  While good for shareholders in the short term, we worry that none of them are investing enough in the future, while they reap the rewards of their predecessor’s investments (except Darren Entwistle, who made the original investments to reap today’s rewards).

 

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