Good morning. Big companies announcing new CEOs lately are mostly choosing insiders. Think of Walmart’s John Furner, Target’s Michael Fiddelke, and Geico’s Nancy Pierce. But 2025 has actually been a big year for outsider CEOs. With AI roaring ahead plus unprecedented tariffs, historic geopolitics, and rampaging activist investors, boards of directors naturally want someone who can change a company’s direction, and often an outsider, untethered to the company’s past, seems like the right choice. Through September, 33% of the new CEOs in the S&P 500 this year were outsiders, a striking increase from 18% last year, according to the Conference Board. Insider CEOs often seem like the obvious choice, but Jim Citrin, who leads the CEO practice and co-leads the board practice at the Spencer Stuart advisory firm, tells me that research supports boards taking a chance on an outsider—in this or any other business climate.
When it’s time to replace the CEO, boards tend to choose insiders, on the assumption that they outperform outsiders. “That’s an absolute belief,” Citrin says, based on 25 years of counseling boards on successions. But “it’s not true. The data shows that insiders and outsiders perform virtually the same on an average basis of total shareholder return relative to the market.” Spencer Stuart research of 950 CEOs at S&P 500 companies shows that 34% of insiders are classified as overperformers while 33% of outsiders are. The difference is the volatility of performance. With outsiders “there’s more upside, but there’s more downside,” Citrin says, meaning the good performers tend to be really good and the poor performers tend to be really poor.
A related belief held by most of the thousands of directors Citrin has counseled is that seasoned CEOs perform better than neophyte CEOs. Wrong again—it’s just the opposite: “The data is incredibly strong that first-time CEOs outperform experienced CEOs.” Specifically, Spencer Stuart research has found that when a CEO ran two successive companies, 70% of them performed better on the first. The one exception, Citrin says, is “when it’s a clear turnaround and you have someone who is credible in that market and ideally has a playbook.” Think of Lip-Bu Tan at Intel.
One of directors’ most strongly held views is that insider CEOs bring more stability. It seems so obvious. Citrin says the data isn’t in yet, but he’s skeptical. An insider CEO will typically have been one of two or three candidates, and those who didn’t get the job typically leave, he says. Plus, an insider knows where the bodies are buried and wants to build their own team. So it could be that on average, insiders “make more change in the C-suite than someone coming in from the outside.”
Citrin says he tells directors about all these findings, but “that doesn’t mean you should do anything. All it means is—and I say this to boards all the time—just be a little more open-minded to what is right for your context at this moment.”
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Top news
Rebuffing Paramount’s deal
Warner Bros. Discovery is reportedly set to tell shareholders to reject Paramount’s deal, leaving Netflix in the pole position and forcing Paramount CEO David Ellison to consider sweetening his deal for the news and entertainment company. Affinity Partners, the fund tied to Jared Kushner, President Donald Trump’s son-in-law, has pulled out of Paramount’s offer.
Inside OpenAI’s ‘Code Red’
Fortune has the inside story of the ‘code red’ that OpenAI CEO Sam Altman called earlier this month to rally his troops amid fiercer AI competition. The company is not in a life-threatening crisis, but “the code red alert reveals a real concern within OpenAI that the $500 billion company could lose its position as the standard-bearer and pacesetter for generative AI technology,” Fortune reports.
Amazon’s OpenAI investment
Meanwhile, OpenAI is in talks with Amazon about an investment worth more than $10 billion and a deal to use Amazon’s AI chips. The report comes after OpenAI loosened its relationship with Microsoft this fall, opening the door to raise money and partner with other companies.
A SpaceX IPO could bring headaches
Elon Musk’s SpaceX is reportedly considering an IPO that would give it a potential market cap of $1.5 trillion. Exposing the company to public speculation and additional regulations could bring a long list of issues for the already-busy founder.
Tracking Big Tech stock gains
Big tech stocks like Microsoft, Apple, and Meta are lagging slightly behind the S&P 500 so far this year, and Amazon falls far short with just a 3% gain. Google parent Alphabet, on the other hand, is up around 68%, and investors think its success in AI means more gains are on the way.
PwC’s Gen Z ‘resilience training’
PwC in the U.K. is offering its Gen Z employees training to improve their resilience in the workplace. They’re being taught how to handle day-to-day work dynamics—especially pressure, criticism, or sticky situations, all of which are common in deal-making scenarios. Phillippa O’Connor, chief people officer at PwC U.K., says some Gen Z workers haven’t developed such muscles because of pandemic disruptions.
The markets
S&P 500 futures are up 0.36% this morning. The last session closed down 0.24%. STOXX Europe 600 was up 0.42% in early trading. The U.K.’s FTSE 100 was up 1.69% in early trading. Japan’s Nikkei 225 was up. 0.26%. China’s CSI 300 was up 1.83%. The South Korea KOSPI was up 1.43%. India’s NIFTY 50 was down 0.16%. Bitcoin was steady at $87K.
Around the watercooler
Satya Nadella called IQ without emotional intelligence a ‘waste.’ Research shows being vulnerable at work can even help CEOs win investor trust by Sasha Rogelberg
OpenAI releases new image model as it races to outpace Google’s Nano Banana amid company code red by Sharon Goldman
As Americans continue to feel the pain from tariffs and inflation, Lidl launches holiday meal deal for less than $4 per person by Nino Paoli
Reese Witherspoon says, ‘I don’t think my career would be possible’ in the age of AI and social media: ‘It’s a different world’ by Sydney Lake
CEO Daily is compiled and edited by Joey Abrams, Claire Zillman and Lee Clifford.
