How Multi-CEOs Justify Their Role
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To all intents and purposes, multi-CEOs ought hardly to exist: Considering the many tasks that CEOs have and the fact that they bear overall responsibility for a company’s success, it is barely conceivable that they can do justice to the requirements of several companies at the same time. The study by Professor Graf-Vlachy and his team shows how multi-CEOs and allied stakeholders, e.g. supervisory boards, endeavor in various ways to raise the legitimacy of such an arrangement.
For example, they often publicly acknowledge that a multi-CEO arrangement is undesirable, but at the same time propound that it is unavoidable in their specific situation. The companies often search for a CEO from start to finish and discuss the whole process openly, which lends legitimacy to the final result – a multi-CEO arrangement. “Multi-CEOs also often vocalize how much work it is to run two companies, which gives shareholders the comfortable feeling that their concerns are being taken seriously,” says Professor Graf-Vlachy. “Simultaneously, however, they maintain that their task is by all means doable, for example because they have excellent teams who support them. In particular, they often have Chief Operating Officers who lighten their workload. One example is Gwynne Shotwell, who more or less runs SpaceX for Elon Musk.”
Trying to dispel the impression of a conflict of interests
In addition, multi-CEOs often agree on only symbolic remuneration: “Apple paid Steve Jobs a salary of just one dollar. But he owned a lot of shares, which reassured investors that he would only make money if they did too.” Multi-CEOs also consciously divide their working hours between the companies’ headquarters, whether by running backwards and forwards between them every day, like Dorsey between Twitter (now X) and Square in San Francisco, or by splitting their time between Paris and Tokyo, as Carlos Ghosn did for Renault and Nissan. Multi-CEOs also try to dispel the impression of a conflict of interests, for example by professing to abstain from decisions that might have an impact on both their companies or by articulating explicit decision-making rules.
“The study improves our understanding of how multi-CEOs land such positions and how they get away with it,” concludes Professor Lorenz Graf-Vlachy. The study was published recently in the journal Academy of Management Discoveries.
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