New Adidas CEO Kasper Rorsted Worth an Instant $1 Billion

How much do you think a good CEO is worth to a company? Well, apparently, they can be worth upwards of $1 billion overnight if you look at things from a shareholder point of view.

When Adidas confirmed that Kasper Rorsted would be joining the company as their new CEO today, shares in Adidas jumped as much as 12%, adding more than $1 billion to the market cap of the company, before falling back again to close the day up 6.25%. Rorsted’s move also led to a slump in the stock price of his current company Henkel, as they finished the day down 4.11%, reeling from the loss of their leader who has developed an almost cult-like following.

Do we invest in companies, or people?

These huge swings have led some analysts to ask the question ‘what do we invest in, is it companies, or is it the people who lead the organisations?’. Today’s gain in the share price of Adidas – coupled with the decline in Henkel’s – would suggest that many investors are far more confident in the potential of an individual than they are in the brand value of an organisation. To see how much value an individual like Rorsted can add, you would do well to look at the rise in the share price of Henkel since Rorsted became CEO back in 2008. Since taking over the running of the company, the share price of Henkel had almost quadrupled to its peak of over 115 EUR per share back in April of 2015, before falling back in recent months.  

Does this justify CEO wages?

Another question many people might ask when you consider how much value Rorsted’s move has added to the value of the Adidas brand today is this, ‘do these huge rises in the value of the Adidas stock justify the huge pay packets and bonuses many CEOs receive?’. Other news released today showed that the wealth of the top 1% is now equal to that of the rest of the world, and there has been much outrage in recent years as to just how much remuneration those at the top of the corporate ladder receive when compared with that of the average worker at the same company. So, do moves in the value of a stock like those we have seen at Adidas today go some way to justifying these hefty pay packets, by showing how much value a CEO can add – $1 billion in the case of Adidas? Or, do you feel that CEO wages should be capped in line with those of the average worker at a specified company?

Whatever your feeling is on the subject, today’s moves in the market were sharp and profound, and they certainly show that who you have heading up your company can play a huge role in investor confidence, and has the potential to significantly boost your stock if you get the appointment right.

Will Rorsted’s Move to Adidas Lure You to Invest?

Image: World Economic Forum under CC BY 2.0

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