Apollo, up 6,340% in the past 15 years, led the 63, followed by Amazon amzn (4,381%) and Pre-Paid Legal Services ppd (4,302%). USA TODAY attempted to smooth out the impact of the highfliers, yet still found a median stock appreciation of 521%. Forty-seven of the 63 at least doubled the performance of the S&P 500.
Even when adjusting for industry trends, "The excess return is robust," Fahlenbrach says.
So robust that Charles Schwab schw, a member of Club 63 with a stock rise of 2,139%, sounded a little surprised. Schwab says he has met many members of the club, including those who join him on the Forbes 400 list of richest Americans: Jobs, Smith, Ellison, Warren Buffett, Michael Dell and Alfred West, founder/CEO of SEI Investments seic. "They have purpose," Schwab says.
"It's their baby," says Raymond Mason, CEO and founder of financial services firm Legg Mason lm, where the stock has risen 1,585% since 1993. "Founders feel like they raised the company from a pup. Their reputation is staked to it."
A personal stake
There are other reasons why founders have been better than CEOs who clawed their way to the top.
•Their personal fortunes are tied to the company stock. Ellison, for example, owns nearly 1.3 billion shares of Oracle, worth $25 billion. That focuses them more on share appreciation than paycheck appreciation, says Greenwich, Conn.-based Renaissance Capital Chairwoman Kathy Smith. Once rich, the founders' personal legacies become an overriding concern, and pride, a strong incentive.
•Because founders aren't looking for the next job, they don't risk long-term performance for the short. "We reinvent our company every 10 years. We've done this four times," says West, whose SEI Investments is up 1,808%. "It takes five years to reinvent and five years to collect the benefits. The quarterly stuff doesn't matter as much to the founder."
•They fight to survive in the early years, which leaves them positioned to deal with challenges down the road and gives them a glass-half-full optimism, says Fred Bauer, founder/CEO of auto supplier Gentex gntx, up 1,397% and a member of Club 63.
•No one knows an industry better, "the nuances, the tactile feel," says FedEx CEO Smith. Says Schwab: Founders make key adjustments, and his company was launched before the Internet age, as were Apple, Dell dell and FedEx. All are heavy users of the Internet today.
•The presence of a founder reduces the "tug of war between different people with different agendas," says Steve Wheeler, senior vice president at consultancy Booz Allen Hamilton. Fahlenbrach says that can cut both ways, as outside talent can be hard to recruit to founder-led companies because they see a ceiling to their future. Then again, FedEx's Smith says, CEOs who climb the ladder are not always comfortable hiring people who are smarter than they are.
"I'm not smarter, better or working harder," than CEOs who are not founders, says Pre-Paid Legal Services CEO Harland Stonecipher. The difference, he says, is that he started out with three employees and developed relationships as his stable grew to 800. Had he walked into a company with 800 employees, such relationships would have been impossible.
FedEx's Smith says there was a "self-selecting mechanism" at play with the study. "If you've been around a long time, you must be performing."