Baltic Corporate Excellence Award 2019 - CEO background matters

Updated: Dec 16, 2019

Corporate governance always has been a hot topic on the Baltic stock exchange if we remember not so far in past Olympic Entertainment Group case (disagreement between largest shareholder and minorities on selling price) or an ongoing proxy war limbo with Olainfarm AS just to name a few. Unfortunately, all this impacts also firm’s operating routine and, particularly, CEO’s success in company’s management. However, the problem cases do not emerge often and CEO’s previous experience and education should have a larger impact on the company’s performance. So, we decided to look into the professionalism of CEOs managing Baltic companies and whether their background could be relevant to the performance.


First, we assessed CEOs background, which included previous professional experience and education, and assigned certain rating: 1) Specialist background (Has relevant to the business niche education and experience/is a founder/was involved in product development); 2) General experience background (Was responsible before for strategy, marketing, operations in relevant industry); 3) Background in support functions (Has irrelevant experience and education/held supporting position such as IT, legal, etc.). Additionally, we have calculated the tenure of CEOs and the company’s stock performance, when a particular CEO was heading the office. For the research purposes we considered only CEOs who had been in the office for more than a year. Interestingly, some of the CEOs held their position for more than 20 years (e.g. Harju Elekter), but the average tenure of Baltic companies’ current CEOs is 8.6 years.

As a result, we got 15 CEOs with Specialist background, 5 CEOs with General background and 7 CEOs with background in support functions. So, we can conclude that Baltic companies overwhelmingly have CEOs with strong background and have full capacity to lead the companies in a professional manner.


Median stock performance in a CEOs group with ‘Specialist background’ is the highest best reaching 6.9% followed by CEO group with ‘Irrelevant background’ and 6.0% return. The lagging group having 2.3% stock performance is comprised of CEOs with Generalist background. The results do no show the logical pattern that the return strongly correlates with the CEO background relevance, but it is noteworthy that the best returns are demonstrated by the companies, which are led by the CEOs with most relevant background.

The present study was done within the scope of the annual Baltic companies assessment, Corporate Excellence award, which is based on a careful evaluation of qualitative and quantitative indicators carried out by the Riga-based financial research centre Alphinox and its partners, Hérens Quality Asset Management AG (Switzerland) and Riga Technical University (Latvia). Noteworthy, three best Baltic stock exchange companies had CEOs from the group, showing the best performance, i.e. with ‘Specialist background’.



For the first time in Baltic Corporate Excellence Award history LHV Group took the first spot as the overall winner in Baltics. LHV Group is fast growing, Estonian capital company, which posted record results for 2018. LHV Bank, largest part of LHV Group, is 4th largest in Estonia by assets and LHV Varhaldus is one of the leading 2nd pillar pension funds asset manager (has 176 thousand customers). Bank offers wide range of innovative products for its customers (e.g., micro investing account, mobile app to trade Baltic stocks online). The company, although expanding rapidly, is able to keep its costs in line and posts decreasing Cost/Income ratio.



Just like in the previous year, second place was taken by Tallinna Kaubamaja AS, which operates one of the largest supermarkets chain in Estonia Selver (~18% market share in Estonia) and is active in car trade and department stores segment. Since the last year, the company showed improvements in its balance sheet and consistently continued to grow its sales and earnings.


Compared to the previous year, Apranga Group has lost is leader position, but still remained in the top three, taking 3rd place on the Baltic stock market. Apranga Group, the leading clothing retailer in the Baltics, having franchise agreements with the global clothing companies to be able to offer Baltic customers well-known brands such as Zara, Massimo Dutti, Hugo Boss, Emporio Armani, Mango. In 2019 the company is implementing the biggest investment program in its history to renew and develop its stores to maintain further growth and expand its presence.


„In Estonian language you can see article in Äripäev: https://www.aripaev.ee/borsiuudised/2019/10/22/lhv-ja-tallinna-kaubamaja-juhid-on-baltikumi-parimad-borsiettevotete-hulgas


In Lithuanian language in Verslo žinios: https://www.vz.lt/rinkos/2019/10/22/lhv-group-isrinko-geriausia-baltijos-birzu-bendrove

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