NEW YORK (TheStreet) -- Companies select their CEOs from within their ranks the vast majority of the time, but not always.
The 29 CEOs appointed to S&P 250 companies in 2014 had an average tenure of 17.6 years at the firms they are now running before arriving at the executive suite, according to a recent study produced by New York-based advisory firm Feigen Advisors. Nine executives spent more than a quarter of a century with their companies prior to being tapped to lead them. Five, however, had just five years of internal experience or less.
The outsider vs. insider debate is a long-standing one, and there are valid arguments on both sides of the issue.
One study by researchers at Rice University and the University of Southern California found that in the first three years of tenure, strategic changes brought about by inside and outside CEOs yield essentially the same level of performance in terms of return on assets. But after three years, they found alterations made by the insider fare better.
A separate study from professors at Sabanci University and Northwestern University's Kellogg School of Management reached the same conclusion -- that within the first three years, there isn't much difference between insider and outsider performance. However, researchers concluded that new external CEOs outperform insiders under certain circumstances: when they are brought on under conditions of poor performance or high industry growth; or when they replace senior management teams with new executives.
"While in general boards wisely prefer the inside candidate who has the experience to hit the ground running, it is good practice to look externally," said Marc Feigen, CEO of Feigen Advisors. "If you choose an outsider, it's because you are demanding as a board such significant change that you think the fresh perspective of an outsider is more likely to succeed than someone who is acculturated or in some ways wedded to your older ways. You are signaling you want a dramatic change in strategy, a dramatic improvement in execution and performance."
Outsider CEOs have a unique set of advantages and face their own set of challenges as well.
"The advantage is, the person comes in, and obviously they bring an outside perspective. They may come from an industry that is similar, but they've got a successful track record.... They can challenge the strategic plan," said Jena Albernathy, managing partner and chair of board services at executive search firm Witt/Kieffer. "The disadvantage is, obviously, it's a new industry. So what may have worked in one industry may not work in this industry. They haven't lived through the trenches, and they don't have the political ties."
Some companies mitigate the fresh blood issue by bringing in potential successors a few years before a CEO change is set to take place, which gives future CEOs time to acclimate and allows boards to watch them perform. The tactic requires a high amount of preparedness and foresight by the company.
"If you go back 10 years ago, succession was never as smooth as it is now, and that's because companies and boards are really focusing on having proper succession," said Jeanne Branthover, managing partner at New York-based global executive search firm Boyden. "I think the crisis has really educated companies on many, many issues."
All debates aside, these four major companies went for it and tapped relative outsiders as their new CEOs -- including two that are complete newcomers to their firms.
AIG: Peter Hancock
He first joined AIG in February 2010 as executive vice president of finance, risk and investments and later moved to the role of executive vice president of property and casualty insurance before being tapped as CEO. He spent 20 years of his career at JPMorgan (JPM) - Get Report , beginning in 1980, and left in 2000 to start his own advisory firm, Integrated Finance Limited. He also spent two years at KeyCorp from 2008 to 2010.
Hancock replaced the late Robert Benmosche, who stepped down from the post last year. He was selected over Jay Wintrob, the head of AIG's life and retirement division who had been with the company for more than 25 years. Wintrob announced his departure from the company just weeks after Hancock took over and in October was named CEO of another firm, Oaktree Capital Group (OAK) - Get Report .
Hancock's predecessor, Benmosche, had been a true outsider to AIG. He came out of retirement to become CEO of the insurance company in 2009 in the wake of the financial crisis and the firm's government bailout.
When contacted with request for comment, an AIG representative pointed to Hancock's appointment announcement.
Oracle: Mark Hurd
Safra Catz and Mark Hurd were appointed co-CEOs of Oracle (ORCL) - Get Report in September 2014. Catz, a former investment banker, had been with the company since 1999. Hurd, however, only arrived in 2010 -- with two stints as CEO at other companies already under his belt.
Prior to joining Oracle, Hurd served as the chairman, president and CEO of Hewlett-Packard (HPQ) - Get Report and had also been on the board of News Corp (NWS) - Get Report . He spent 25 years at NCR Corporation (NCR) - Get Report , where he made it to the chief executive role as well.
Catz and Hurd succeeded Larry Ellison, who had led the enterprise software company since its foundation. He is now the firm's executive chairman and chief technology officer. Catz handles manufacturing, finance and legal issues, and Hurd tackles sales, service and vertical industry global business units.
Ellison earned a $1 base salary as Oracle's chief executive. Before even becoming co-CEOs, Catz and Hurd were bringing in $950,000 salaries each.
An Oracle representative declined to comment.
Target: Brian Cornell
Brian Cornell landed directly in the CEO role at Target (TGT) - Get Report in August 2014 and is about as much of an outsider as they come. Though he boasts three decades of experience in food and consumer products retail, he is brand new to the company.
Prior to arriving at Target, Cornell was the chief executive of PepsiCo Americas Foods, the largest of PepsiCo's (PEP) - Get Report four divisions. He had also been the CEO of Walmart (WMT) - Get Report division Sam's Club and Michaels Stores and an executive at Safeway.
Cornell arrived at Target at a tough moment as the successor of Gregg Steinhafel, who exited the company in May in the wake of a late 2013 data breach that left millions of customers' information exposed. One of a trio of new CEOs hired at discount retailers in 2014, Cornell faces a bit of an uphill battle in turning Target around but has made major strides in his first year.
Target representatives did not respond to request for comment.
Actavis: Brent Saunders
Brent Saunders has kept the CEO title through two major pharmaceutical M&A deals over the past year and a half.
He became chief executive of Forest Laboratories in 2013, and when the company was acquired by Actavis -- now Allergan (AGN) - Get Report -- for about $25 billion in July 2014, he took its helm, replacing Paul Bisaro. He oversaw Actavis' subsequent $70 billion takeover of Botox-maker Allergan and remained in charge of that combined entity as well.
Prior to arriving at Forest and Actavis, Saunders had been the CEO of eye care company Bausch + Lomb and a senior executive at pharmaceutical company Schering-Plough.
He was 43 when appointed as CEO of Actavis -- the youngest of any new chief executive hired to S&P 250 companies in 2014.
Allergan representatives did not respond to request for comment.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.