1. Hacking away: The year started and ended with major hack attacks. It ended with Sony Pictures CEO Michael Lynton trying fruitlessly to cope with the massive cyberhacking attack on his company’s intellectual property and prompting him to withhold release of The Interview for a few days under threat of terrorist attack. But 2014 also began with a CEO trying to cope with the immense fallout from a hack, as Target CEO Gregg Steinhafel tried—and failed—to right the company after a Christmas 2013 digital invasion. Home Depot, JPMorgan and other big companies and brands also were afflicted by significant data breaches. The proliferation of successful attacks last year—as many as 2,000 that the federal government admitted knowing about—ensured that many CEOs will be elevating the importance of digital protections of their companies’ data in 2015.
2. Oiling the skids: Oil prices slid late in 2014, creating untold ripple effects in the U.S. and global economies and geopolitical ramifications as well. Most of these were positive for American companies, as CEOs saw spending rise because of the money that U.S. consumers were saving at the gasoline pump. The slide also kept U.S. car sales humming through December. The short-term losers, of course, were energy-company CEOs who had to decide how to ease the pressure of falling prices. Middle Eastern monarchies and Russia were other big losers from the oil-price decline that has been prompted in large part by the growing bounty of U.S. oil and gas supplies due to horizontal drilling and hydraulic fracking. For 2015, economists say that CEOs should be betting on continued moderation in oil prices.
3. Tempest in the corner office: CEOs themselves—and, often, their bad behavior—were at the center of many of the biggest business stories of 2014. They included those whom it was difficult to drag off the stage, such as Dov Charney at American Eagle, as well as those who stuck their foot in their mouths, such as Abercrombie & Fitch CEO Mike Jeffries with his comments about why he doesn’t making clothing for fat women. Others were under glaring spotlights and dealing with immense challenges, such as General Motors’ Mary Barra, whose company faced huge safety recalls and liabilities; IBM’s Virginia Rometty, who was scrambling to revise IBM’s business model in the face of an unprecedented slump; and McDonald’s’ Don Thompson, who was trying to keep the Golden Arches from crumbling. It’s hard for CEOs to avoid new business challenges, but look for more circumspection in the corner office in 2015.
4. Activism unleashed: Darden Restaurant Group CEO Clarence Otis paid the ultimate price of shareholder activism in 2014 by losing control of the company to one of the most effective agitators, Starboard Value. Such successes, and the continued struggles faced by many CEOs, emboldened activist investors generally as they also targeted companies including PepsiCo, Hertz, Family Dollar, Yahoo and even Apple. No doubt activist investors will grow in influence in 2015 as bloodless investors demonstrate less and less loyalty to ensconced CEOs, and as the still-treacherous business climate is sure to create new vulnerabilities in the executive suite.
5. Undependable economy: The year-end comments by former Fed chief Alan Greenspan about a “very sluggish economy” underscored the fact that U.S. and global economic growth remains iffy, something that CEOs are keeping at the top of their list of concerns for 2015. Thanks in part to strong second-half growth in the United States, most American CEOs believe the economy at least has tipped decisively in a positive direction. But its vigor remains restrained by concerns such as underemployment, a tentative housing recovery and CEOs’ worries about continued over-regulation. Also, the economies of nearly every major emerging market, stretching from China to Brazil, have cooled.
6. Aversion to inversion: CEOs of companies including Walgreen’s and Burger King turned to “inversion” strategies to merge with foreign-based companies and then move their headquarters abroad to avoid much higher U.S. tax rates. The trend gained momentum in the spring when New Jersey-based Pfizer tried to buy rival UK-based drug maker AstraZeneca, a deal which eventually fell through. Burger King then bought Tim Horton’s of Canada. Democratic politicians complained that U.S. companies were trying to dodge paying their “fair share” of taxes to the federal coffers. So after Walgreen’s bought UK’s Alliance Boots, the merged company kept its headquarters in Chicago. And the U.S. Treasury Department stepped in with new rules that would make inversion-based deals less lucrative.