Co-CEO Arrangements Are A Mixed Bag

Co-CEO Arrangements Are A Mixed Bag

Whether or not Co-CEO arrangements work in general is a mixed bag. Co-CEO arrangements can be effective when responsibilities are clearly defined. Less than optimal outcomes occur when responsibilities are not well-defined. Below are a number of current and recent Co-CEO arrangements primarily across the Technology industry.

Reed Hastings and Ted Sarandos of Netflix (ticker: NFLX): Strong-willed founders often struggle with succession planning. Hastings appears to be more thoughtful and reflective than the average CEO. For example, Netflix’s approach to transparency with its Board of Directors is unique. Further, Sarandos already has significant operating responsibility and will continue in his role as Chief Creative Officer. Our bet is this arrangement will work.

Richard Whitt and Thomas Gayner of Markel Corp. (ticker: MKL): Having Tom Gayner and Richard Whitt as Co-CEOs of Markel Corp. has worked well for MKL shareholders until mid-March of this year when the diversified financial services firm ran into COVID-19. MKL shares have since started to recover.

Scott Farquhar and Michael Cannon-Brookes of Atlassian Corp (ticker: TEAM): Farquhar and Brookes are are Co-Founders and Co-CEOs. Atlassian has performed well since its December 2015 IPO as measured by revenue and profitability growth as well as from a total stock return standpoint. The firm continues to be a leader (one of the two best along with Microsoft) in the collaboration software space.

Dr. CC Wei and Dr. Mark Liu of Taiwan Semiconductor (ticker: TSM): Drs. Wei and Liu have worked together for many years, including time as Co-COOs (2012-2013) and Co-CEOs (2013 to 2018). Today, Dr. Liu is TSM Chairman and Dr. Wei is TSM CEO. TSM has been a model of C-Suite continuity in stark contrast to many U.S. Technology company C-Suites. The company remains the leader in semiconductor manufacturing.

Dr. Aart de Geus and Dr. Chi-Foon Chan of Synopsys (ticker: SNPS): Dr. Aart de Geus co-founded Synopsys in 1986. Dr. Chi-Foon Chan joined Synopsys in 1990 as Vice President of Applications and Services. Therefore Drs. de Geus and Chan have the benefit of long-term continuity. SNPS shares have generally marched upward having returned approximately 2449% since its February 1992 IPO.

Marc Benioff and Keith Block of (ticker: CRM): This Co-CEO marriage did not work. Block stepped down and exited Salesforce in February 2020. Block was recruited by Salesforce as COO in June 2013 and was promoted to Co-CEO in August 2018. Benioff and Block have different personalities as Block is a former Booz Allen Senior Consultant to the U.S. Air Force and Benioff is more of a creative type. Benioff is today Salesforce’s sole CEO.

Christian Klein and Jennifer Morgan of SAP (ticker: SAP): This Co-CEO arrangement was short-lived. SAP has utilized the Co-CEO model in the past. Klein and Morgan were named Co-CEOs in October 2019 before Morgan stepped down in April 2020.