Superstar CEO

How important is a superstar CEO? Can one make a case for owning a company just because it has a hero at the helm? Should we blindly back entrepreneurs who start, build and then run great companies?

In my experience, when a company does really well, the media puts the chief on a pedestal. When a company falls on hard times, the converse happens. The boss guy must be an idiot!

Here at Vestact we are inclined to pick great businesses operating in promising parts of the economy, and to assume that they will be run by good people over time.

Highly visible CEOs who are fully engaged are great, but there is always a risk of them retiring or falling ill and leaving abruptly? Jeff Bezos, Elon Musk, Johann Rupert, Stephen Saad and Adrian Gore are amazing, but without them at the helm what will happen? Warren Buffett has done an amazing job at Berkshire Hathaway, but he is 87 years old and will be winding down soon.

Losing an inspirational leader can be tough and dent a company's rating, but usually shareholders should just be patient and wait for new management to come to the fore. Apple has been a good case in point. When Steve Jobs died, the naysayers moaned that the company "was no longer able to innovate". Since then its gone from strength to strength under Tim Cook.

I was thinking about this topic overnight, because one of our recommended companies JP Morgan, announced that its CEO Jamie Dimon would stay on for another five years.

Dimon is one of the most respected corporate CEOs in the world of business. Extending his contract is like Leo Messi announcing that he's going to stay on at FC Barcelona for the next five seasons!

He has been CEO since 2005. He's charismatic and opinionated, and is sometimes mentioned as a possible US presidential candidate. He's a pro-business centrist who once described himself as "barely a Democrat".

The succession plan at JP Morgan was clarified yesterday too. Daniel Pinto and Gordon Smith, currently the heads of the corporate and investment bank and its consumer bank have been elevated to the role of co-chief operating officers.