More ‘boomerang CEOs’ return to their old companies amid crises
NEW YORK, UNITED STATES — A growing number of companies are turning to their former chief executives to steer through turbulent times, marking a new era for so-called “boomerang CEOs.”
Ski resort giant Vail Resorts announced the return of Rob Katz as CEO, replacing Kirsten Lynch after a challenging tenure. Similar moves have unfolded at UnitedHealth Group, as boards look to seasoned leaders for immediate stability and investor confidence.
Why boards are bringing back old leaders
At Vail Resorts, Katz’s reappointment follows a period of labor unrest, declining skier visits, and a sharp drop in share price. “Rob has a strong track record of driving innovation and executing consistent performance at Vail Resorts,” said Bruce Sewell, the company’s lead independent director.
The move comes after Lynch’s three-year run as CEO, during which the company’s stock lost nearly 30% of its value and was marred by a 12-week labor strike.
UnitedHealth Group also turned to a familiar face, reinstating Stephen Hemsley as CEO after Andrew Witty’s abrupt retirement.
The company faces not only disappointing earnings and a Department of Justice investigation but also the aftermath of a high-profile executive’s murder and subsequent social media backlash.
Risks and realities of ‘boomerang’ approach
Despite the comfort of familiarity, experts warn that bringing back former CEOs is no guarantee of success. “When you go backward, you are reaching back to someone who was very successful in a different scenario. Their playbook might still be applicable, but it might not,” Deb Rubin of RHR International cautioned.
A University of North Carolina and Marquette University study of 6,000 CEO tenures found that boomerang CEOs typically deliver lower returns than first-time leaders, especially in fast-changing industries.
Jeanne Branthover of DHR Global noted that such moves may signal weak succession planning and risk demoralizing other senior leaders. “Whatever leader you’re bringing in, it’s giving everybody a message,” she said.
Context matters in leadership decisions
While the track record for returning CEOs is mixed, boards sometimes have little choice amid today’s leadership shortages and unpredictable crises. Declining interest in the pressures of running public companies and recent “black swan” events have left many firms scrambling for experienced hands.
Tech giant ServiceNow also recognized the trend of boomerang hires to stay competitive. Simon Cox, ServiceNow’s Chief Transformation Officer, talks about the importance of adapting to a workforce predominantly comprising Gen Z and millennial employees eager for varied experiences.
Firms like Deloitte, boasting an alumni network exceeding 20,000, are also implementing this approach, offering various benefits to encourage re-engagement.
