CEO Confidence Index February 2007

Business Conditions Seen as Better for Business Special Section: CEOs Opinions Vary Widely on Global Warming

March 8 2007 by Chief Executive


Perseverant in an upbeat attitude, Chief Executive Magazine’s CEO Confidence Index jumped 9.0 points this month to 171.0 according to 271 top executives surveyed. Since September of 2006, the Index has risen 15% (over 22 points), signaling increased confidence in the economy. Peter A. Howley, Chairman of Western Ventures said “Our economy is booming by any measurement except the main stream media’s!” Overall Confidence is only 11 points off its highest level since 2002. All component indices, used to calculate overall CEO Confidence rose this month as well.

The Business Conditions Index rose by an astounding 17.8 points this month alone, settling in at 194.4. Almost 60% of CEOs (58.5%) rate current business conditions as “good,” and over 75% of those polled expect growth in the economy in the coming quarter. Regarding current business conditions, one CEO simply said that is was the “Best that I have seen€¦” Confidence in current economic conditions was also strong, as the Current Confidence Index jumped by a full 14 points.

Although confident in the short term, CEOs are noticeably less confident about the future. Even though the Future Confidence Index has risen 17 points in the last 5 months, the Current Confidence Index has grown by 30 points in the same time period. CEOs seem aware and worried that many longer-term issues, like health care and Social Security will eventually pose a threat to our economy. One CEO noted, “While my feeling is generally good for the short-term, I believe that our government is incapable of dealing with many issues regarding budget stability, including health care and social security. I believe that the long-term prognosis is rather dismal without tackling the budget issues now.”

In the wake of the report by the Intergovernmental Panel on Climate Change (IPCC) earlier this month on global warming, Chief Executive Magazine asked their respondents additional questions about climate change and alternative fuels. Opinions of CEOs varied widely and were full of passion on both sides of the issue. “Few topics have evoked a more split opinion and more emotion among CEOs,” said Edward M. Kopko, CEO of Chief Executive Group.

CEOs were asked to characterize their thoughts on how real the threat of global warming was. The single most common response, listed by 41% of respondents, was that the threat of global warming was “immediate and urgent.” One respondent simply exclaimed, “This is no joke. Those who dismiss global warming as hype are morons.” Others took a more conservative attitude while still stressing the importance of the issue. Scott McWilliams, CEO of Ozburn Hessey Logistics stated “It is our responsibility as company leaders and good corporate citizens to continue to push for investments in alternative sources of energy and other environmentally sensitive initiatives€¦” Kieth Ayers of the Integro Leadership Institute said, “It is time we listened with an open mind…”

However, many CEOs were more skeptical. 43% of respondents characterized the threat of global warming as either “marginally threatening” or “over-hyped.” Scott Feamster, President of MATRiX International urged those discussing the topic to “Separate science and politics.” Zachary Smulski of Sea Mar Community Health Clinics pointed out “We should be good stewards of our natural resources and not pollute the environment. However, … [we] need to be careful about concluding how much impact Man really has…”

CEOs were also asked about government subsidies for companies investing in alternative energy. Here there was more unanimity. Over two-thirds of CEOs (69%) felt that companies should indeed receive government benefits for investing in alternative sources of energy. While CEOs acknowledge the impact cleaner forms of energy would have on the environment, they also stressed its importance as a domestic policy: “This is more a matter of energy security than a concern about global warming,” said one respondent.

The CEO Confidence Index normally is released on the third Tuesday of each month. For additional information regarding the confidence of public- and private-company CEOs, details about regional CEO attitudes on employment, investment and business conditions, as well as confidence differences between service and non-service industry CEOs, visit our full report at http://www.chiefexecutive.net/ceoindex.

Chief Executive is a controlled circulation magazine that has been published since 1977. It reaches 42,000 chief executive officers and their peers, reaches a total readership of 170,000. Chief Executive Group facilitates “Chief Executive of the Year,” a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of his or her peers. A. G. Lafley, George David, Fred Smith, Bill Gates, John Chambers, Michael Dell and Sandy Weill are just some of the leaders who have been honored during the award’s 20-year history. Chief Executive also organizes roundtable meetings and conferences to foster opportunities for top corporate officers to discuss key subjects and share their experiences within a community of peers.

CEO Index, February 2007

Respondents: 271

Feb 07Change from Prev Month
CEO Index 171.09.0
Current Confidence Index216.114.0
Future Confidence Index140.55.6
Business Condition Index194.417.8
Invest Confidence Index143.15.6
Employment Confidence Index181.03.6

How real is the threat of global warming?

Cooked up & over hyped by academia and politicians 21.03%
Real but marginally threatening21.77%
Something to worry about, but we currently have more urgent worries14.76%
Immediate and urgent40.96%
I don’t know1.48%

Should companies investing in alternative sources of energy receive government subsidies?

Yes

69.40%

No

30.60%