All Else Equal: Making Better Decisions Rerun: Ep29 “How Do You Become CEO?” with Dirk Jenter
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Mar 4, 2026 
Dirk Jenter, a finance professor at LSE who studies CEOs and executive pay, joins the conversation. He discusses who typically rises to CEO and the common career paths. He explores why boards often favor insiders and when firms bring back former leaders. He also talks about how pay is set, including the role of firm scale and peer comparisons.
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CEOs Truly Move Company Outcomes
- CEOs materially change firm behavior and performance when they change, showing management is a real, varying technology.
- Dirk Jenter finds CEO deaths create diverse firm reactions and 20–25% of firms see stock gains after a CEO dies, implying prior mismatches.
Join Your Target Firm Years Beforehand
- To become a large-company CEO, build broad general managerial skills and join the target firm 5–10 years before promotion.
- Jenter shows >70% of S&P 500 new CEOs are internal promotions and ~81% are insiders or closely connected.
Outside CEOs Usually Come From Directors' Networks
- Outside hires are rare and often come from personal networks of directors rather than a wide market.
- More than half of outsider hires were current or former co-workers of the hiring firm's directors, not strangers.