In a market obsessed with earnings, margins, and guidance, what truly defines an exceptional CEO? At Fortune India’s Best CEO 2025 event in Mumbai today, a panel on “Valuing the CEO Multiple” featuring Prashant Jain, Founder & CIO, 3P Investment Managers, and Devina Mehra, Founder, Chairperson & MD, First Global, explored why leadership quality often escapes conventional valuation metrics.

Prashant Jain said the most important CEO trait is something numbers often miss: “whether the company’s competitive advantages are increasing or decreasing.” He cautioned that it is possible for companies to show near-term results while compromising long-term strength, adding that analysts frequently miss this dimension of leadership.

According to him, markets tend to misjudge CEOs who invest for the future. “Analysts would fail in processing if the CEO is taking steps to enhance the longer-term competitive advantages,” he said. On whether CEOs should be given a “honeymoon period,” he noted, “Even for a few years… eventually it will begin to show up in the numbers.”

Devina Mehra said that before return on capital, investors should examine the underlying business. “I would say that it’s return on CEO first, and then the return on capital employed later,” she said. Citing Warren Buffett, she added, “When a good management takes over a bad business, it is the reputation of the business that is likely to continue.”

She pointed out that businesses inherently limit what CEOs can achieve: “One part, one quality of the CEO which is probably not captured… is the long-term perspective and, for want of a better word, the integrity part.”

The conversation shifted to India’s evolving leadership models—promoter-led, professionally run, and now a fast-growing third category: private equity-backed companies with founders holding minimal stakes.

Jain cautioned against simplistic binaries. “Promoter CEOs can be excellent if they understand their strengths and hire professionals to complement them. But professionally run companies like HDFC, L&T or ITC have also set benchmarks.”

What intrigues him most, however, are new-age firms where private equity holds dominant ownership. “What happens when the PE fund exits and no one has skin in the game? Will these companies mature into the next HDFCs—or flounder?” he asked. “That’s a fascinating question for investors.”

Mehra added a global perspective. Two decades ago, she said, the U.S. and Europe were dominated by professional CEOs. “Today, many of the largest companies by market cap globally are founder-led. It’s not a one-way street.”

When asked about the market’s obsession with startup stars, the experts did not shy away from the ballooning valuations of new-age companies. Jain said: “PE multiples are not just about RoCE. They reflect growth runway, total addressable market, competitive position, and business cycle. Some startups are rightly valued. Many are excessively valued. Excesses and narrative-driven investing have always co-existed—from 1992 to 2000 to 2008.”

Mehra pointed out that hype around founders is not new, but the pendulum swings sharply in the age of social media and quarterly press conferences. “The personality often overshadows the predictability of performance,” she said.

When asked whether CEOs can stop giving guidance, the panel referenced former Unilever CEO Paul Polman, who famously stopped giving quarterly guidance and still delivered 290% shareholder returns during his decade-long tenure.

Could Indian CEOs follow suit? Mehra said the environment in India is less obsessed with rigid guidance than the U.S. market. “Many Indian companies don’t give quarterly guidance anyway. And remember, Unilever is not American—it’s the U.S. markets where missing earnings by one cent can wipe out 30% of a company’s value in a day.”

She also challenged the “CEO-as-superhuman” narrative: “The entire burden of performance—positive or negative—is not just on the CEO. The business realities matter too.”