Cue the Succession theme song.
Analyzing CEO Succession: How We Helped Investors Make Informed Decisions
Last week, a group of investors on the board of a financial company convened to discuss a critical issue: CEO succession. They were particularly interested in understanding whether their next CEO should be an internal promotion or an external hire—for the Succession fans, whether to choose a "Tom Wambsgans" or a "Kendall Roy."
Despite reviewing numerous consulting case studies, listing the pros and cons, and hiring experts to weigh in on insider vs. outsider, they still lacked one crucial piece of analysis: a comprehensive look at what the competition was doing. The board was keen to understand comparative transitions in the S&P, but they had hours – not days – to confirm their decision. That's where Matrix came in.
How We Leveraged Hebbia for In-Depth Analysis
We utilized Hebbia to conduct an exhaustive analysis of every company in the S&P 500. Our goal was to identify the industry each company belongs to, determine whether their current CEO was homegrown or externally hired, and pinpoint the quarter in which the transition occurred.
The beauty of using Hebbia is its flexibility in applying both rules-based and subjective criteria. In this instance, we defined a "homegrown" CEO as someone whose job immediately preceding the CEO position was within the same company, promoted internally.
Within seconds, Hebbia generated the results, which we then visualized by industry:
Our analysis revealed that financials companies have, on average, 10% more homegrown CEOs compared to other industries. Intrigued by this finding, we decided to delve deeper.
Digging Deeper: Cross-Referencing Filings from the Time of CEO Transition
To gain a more nuanced understanding, we used Hebbia to cross-reference company filings and transcripts from the year each CEO transitioned into their role. Specifically, we focused on the financial sector within the S&P 500. Hebbia’s agentic capabilities allow it to pull in filings and transcripts surrounding the CEO transition, enabling us to ask more targeted questions. Our objective was to understand what led companies in the financial sector opting for either homegrown or external CEOs. Hebbia produced an extensive database, presenting case studies which the investors could query for additional color. When asked for a concise summary, Matrix provided the following insights:
We further asked Matrix to compare the appointments of David M. Solomon at Goldman Sachs and Jane Fraser at Citigroup:
This comprehensive analysis, which the team was previously unable to conduct at scale, was accomplished in mere minutes with the help of Hebbia and Matrix.
Have an idea for a bespoke question that Matrix can answer? Reach out to support@hebbia.ai.