Co-CEOs? Not a Good Idea, Wharton Professor Tells BusinessWeek
The record of companies that have named co-CEOs is so bad that many wonder why any board would split the role, particularly in a recession when decisiveness is key, according to a new article in BusinessWeek, which was partly informed by Wharton management professor Michael Useem. Such split roles are "a marriage of convenience," Useem tells the magazine. "But like all marriages of convenience, it tends to lead to divorce pretty quickly."
The article follows the September 24 announcement by New York-based teen-oriented clothing retailer Aéropostale that CEO Julian R. Geiger would step down at the end of the year, to be succeeded by president Mindy C. Meads and chief operating officer Thomas P. Johnson. But according to BusinessWeek, analysts were nonplussed by the news. They noted that the retailer's "team-oriented culture" was one reason why the board paired Meads, who handles merchandising, with Johnson, who heads store operations. "They work very well together," UBS analyst Roxanne Meyer said. "That's unique, especially given the egos in retail."
Examples of successful co-CEOs often include co-founders or veterans who started together when the company was small. Says the magazine: "RIM's Jim Balsillie, an outgoing finance and strategy specialist, complements the engineering prowess of Mike Lazaridis. At California Pizza Kitchen, Larry S. Flax and Richard L. Rosenfield worked together as lawyers for 12 years before founding their Los Angeles restaurant chain in 1985. 'The secret sauce is simple — we like each other,' says Rosenfield, who handles real estate and investor relations while Flax focuses on operations and the menu. 'We know each other so well we can make important decisions without talking to each other.’ The two even share a modest L-shaped office.'"
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