NEW YORK, Aug. 2, 2005 – Global markets offer plenty of opportunities for growth, but they also pose some risks, according to a new survey of more than 100 NYSE listed-company CEOs. The NYSE CEO Agenda 2006 is a new initiative designed to gain the views of CEOs of NYSE-listed companies on topics impacting and shaping the current and future business climate.
The survey results indicate that CEOs are generally optimistic in finding new markets and new products for growing their companies and serving customers. The United States is seen as the most promising market for growth, followed by Japan and Western Europe, while emerging markets present an opportunity rather than a threat. The study also finds that the CEO role is becoming more demanding, and that CEOs spend substantially more time on compliance. A majority of respondents said that corporate boards are more engaged and better informed. The more than 100 CEOs who participated in the study represent a cross-section of NYSE listed companies with a combined market value of nearly $ 1 trillion.
“We set out to glimpse behind the headlines and let CEOs of NYSE listed companies speak for themselves about the business challenges and opportunities their organizations will face over the next five years,” said Mark Schulman, managing partner of Schulman, Ronca & Bucuvalas, Inc., which conducted the study. “The survey provides unique perspectives and insights from arguably the most important corporate leaders and influencers.”
Following is a link to the NYSE CEO Agenda 2006 executive summary, research presentation and nyse magazine special report: http://www.nyse.com/ceoagenda
Below is a summary of key findings by survey topic:
Opportunities and Risks
A majority of NYSE CEOs said that management teams will have the greatest impact on company performance, followed by operational efficiency and new product development. They are concerned about regulation, energy, health care costs and the changing global economy. The greatest budget increases were expected to be in the areas of capital expenditures, energy costs and technology. More than half of the group (52%) expects M&A activity to increase, while the greatest revenue growth is seen coming from new products, new markets and acquisitions.
--“We have to help our customers increase their market share and reduce costs by applying our expertise and offering good value,” said John Barth, Chairman & CEO of Johnson Controls Inc. (NYSE: JCI).
Globalization
Emerging markets are viewed as an opportunity by a majority of NYSE CEOs (62%). When it comes to operating on the world stage, NYSE CEOs see plenty of opportunity for growth, even though a majority (55%) views the current global trade environment as unfavorable. More than half (53%) of the CEOs also said their companies have moved, are currently moving or plan to move some operations offshore. The key, CEOs insist, is determining which functions can be done from a distance, and which need to stay at home. Among those that have moved, 64% say the results were “very successful.”
--“A multinational corporation must spend time getting to know the markets it operates in, understanding the history and accepting and embracing the culture,” said Stephen Green, Group CEO of HSBC Holdings PLC (NYSE: HBC).
Governance and Compliance
Compliance and governance issues have become a major preoccupation with CEOs. Eighty percent say they spend more time on regulatory and compliance issues than five years ago. Almost 70% find compliance with section 404 of Sarbanes-Oxley the most demanding governance task, and while a majority of CEOs question the balance between the investment required and the resulting benefits, most CEOs agree that Sarbanes-Oxley and Exchange governance rules have contributed to board members being more informed (66%) and better engaged (72%).
--“Anything that’s going to regain investor confidence in Corporate America is worth it,” said Richard Harrington, President & CEO of The Thomson Corporation (NYSE: TOC).
Shareholders
More than one-third (37%) of respondents said it is easier to attract investors than it was five years ago. About another third (31%) said it is about the same. The level of understanding among global investors is greater today than ever, and shareholder benchmarks are not necessarily the same as five years ago. Investors today focus more on traditional performance measures such as free cash flow, operating income, stock price and cash flow from operations.
--Investors are more detail oriented,” said Arun Sarin, CEO of Vodafone Group PLC CEO (NYSE: VOD). “They want to know how you’re going to grow revenues, how you’re going to control costs, what your tax strategies are and how you intend to compete in the global marketplace.”
Human Capital
NYSE CEOs value the quality of their workers, with 62% citing employees as one of the three most important sources of new business ideas. Approximately half of CEOs find it easier to attract new employees, and about one-third find it easier to retain them. Workplace diversity is an increasing driver in managing human capital, and 42% of CEOs say their companies have diversity hiring goals.
--“The greater the diversity of our people, the greater our ability to serve our customers,” Bob Nardelli, Chairman, President & CEO of The Home Depot Inc. (NYSE: HD).
Background on the NYSE CEO Agenda 2006 survey:
In April 2005, Schulman, Ronca & Bucuvalas Inc., an independent market research firm, was commissioned to conduct a study on how CEOs of NYSE-listed companies will meet the challenges and seize the opportunities in 2006 and beyond. The survey was conducted between April-June, generating 103 completed questionnaires from CEOs of companies in 11 countries across 35 industries with a combined market capitalization of approximately $928 billion and 2004 revenues of $885 billion.
