Celebrity CEOs need a Visible Successor to Avoid a Stock Price Crash

How many times in the past month have you seen Steve Jobs or Warren Buffett in the news, or making a company announcement, or in a media comment? Apple is on top of the world right now. If you watch CNBC, the commentators treat Apple as though it will take over the entire Tech World. As for Warren, he was dubbed with “God’s Investment Manager” status years ago when his investment prowess defied description. These CEOs truly are a marvel; they have the foresight, manager ability and commitment to keep Apple and Berkshire Hathaway in the forefront for the foreseeable future. I truly hope both Steve and Warren live to 150 years old and we keep seeing them on TV 5 times per day.

Anything Can Happen to a CEO

Now let us return to Earth. Steve Jobs’ health has not been great and there is a constant media swirl around the word “Cancer”. He has been treated in the past, has admitted to such and is there is constant talk of medical leave. Todd combs, the Apple Chief Operating Officer, Tim Cook has taken over temporarily from Steve in the past and in on scene now. Steve does not look well when on TV and it is apparent why the media keeps making the innuendoes about his health failing.

Warren Buffett is, as far as I know, in good health and still travelling up a storm. The designated successor to Warren is Todd Combs, 39 years old, though it has not been formally stated that Combs will take over after Warren leaves the Company. The issue is Warren Buffett is 80 years old. More power to you Warren. However, the odds of a health issue rise with each passing day.

Corporations need to Voice their Successor Plans

Apple and Berkshire are huge Companies, with market capitalizations of $223 billion and $85 billion respectively. Everyone assumes Steve and Warren have their succession plans ready in case something adverse should happen. The issue, though, is that the public and investors view Apple as Steve Jobs and Berkshire Hathaway as Warren Buffett. These men ARE the Companies. Should something happen to either man, the stock price would simply go into freefall. I have listened to one commentator after another, such as Jim Cramer on CNBC, state that the loss of either man would not ruin the company; each company has strong bench strength. That is true; each company has very smart and experienced people very able to take over the helm. The problem is Where Are Tim Cook and Todd Combs? I never see them on TV, never see or read about an interview, never see them in an advertisement. The day very adverse news hits the wires about one of these men is the day their Company’s stock price will absolutely collapse. The stock price could and probably will return somewhat, but this could take a long time. My question is: why do Steve and Warren not formally announce their successors and start parading them in public. Their public relations people should be able to combat the natural gossip that something must be happening if the second in command is now being more public. Could it be that there is a bit of ego preventing this from happening? After all, Steve built Apple and Warren built Berkshire. It is this Corporate Risk that prevents me from buying either stock. I will wait until an adverse occurrence actually happens before considering an investment in either Company. I am projecting that I would be able to pick up either stock at a 40%- 50% discount I hope that I am never given the opportunity to decide.