Rob Cox: Double-duty CEOs are a worrisome trend

By Rob Cox
August 27, 2015

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Elon Musk is working on some pretty visionary projects. Among those most far along are Tesla Motors’ electric cars, SolarCity’s renewable energy grid and SpaceX’s rockets to Mars. As far as the world knows, though, one thing the billionaire has not managed to develop is a cloning device.

Fiat Chrysler Automobiles boss Sergio Marchionne – who could don another hat to run Ferrari – and Twitter and Square entrepreneur Jack Dorsey may also be exceptional leaders. But they too are human beings. Investors in public companies, especially young or challenged ones, need 100 percent dedication from the boss. That’s physically and mathematically impossible if one person becomes chief executive of more than one company.

There are very few instances of the same person holding CEO titles at two separate listed companies with aplomb. Steve Jobs managed it at Apple and Pixar. But he arguably acted more like a part-time chairman at the animation studio and he sold it to Disney in 2006, when Apple was a fraction of its size and before it rolled out the paradigm-shifting iPhone.

Of course, some people are just better at multi-tasking, making good decisions, motivating their subordinates, delegating work and avoiding distraction than others. Even these paragons, though, need to avoid putting their performance and reputations at risk by spreading themselves too thinly.

As it happens, Musk’s only listed-company CEO job is at Tesla, though he also runs private SpaceX and chairs public SolarCity’s board. Meanwhile in the more traditional auto manufacturing business, Carlos Ghosn is a notable exception to the one man, one job rule. He became the first person to run two Fortune Global 500 firms at the same time when he took over Renault and Nissan in 2005.

Marchionne is another car-industry star who might seem capable of taking on more than is humanly possible. Emulating Ghosn, he managed to run both Fiat and Chrysler for a spell before they merged.

But running two allied companies making similar products is different from overseeing two separate businesses. Bloomberg News this week reported that Marchionne might also become the CEO of Ferrari. If that’s true, he will be taking on a far more difficult balancing act.

Fiat Chrysler owns 90 percent of Ferrari today. But the legendary sports-car maker is embarking on a life of its own. The initial public offering planned in the coming months could give the Maranello, Italy-based icon a valuation of some 10 billion euros, according to Marchionne. Despite a shared Italian heritage, there is little of the sort of overlap between the companies that characterized the Fiat-Chrysler relationship before the two joined forces.

On the contrary, buyers of a $300,000 Ferrari would seem to have very little in common with those shopping for a Dodge Ram 1500 truck, starting at $25,660, or any number of the cheap-and-cheerful models Fiat sells all around the globe. As a standalone, the super-luxury Ferrari, whose logo is a prancing horse, needs a different jockey than its mass-market parent.

Moreover, a newly public company needs full-time direction. There’s no way Marchionne, managerial stud though he may be, could provide that at Ferrari without curtailing some of his involvement at the complex and sprawling $19 billion Fiat Chrysler. Not to mention that he is also vice chairman of Exor, the Agnelli family’s investment vehicle, and chairman of CNH Industrial.

If Marchionne running both Fiat Chrysler and Ferrari sounds like a stretch, what to make of news reports that Dorsey will move from interim to permanent boss of Twitter, the microblogging service he co-founded, even though the company said in June it only wanted full-time candidates? He’s already CEO of Square, a mobile-payments company he founded six years ago. Square has confidentially filed for its own public offering at a time when competition among tech payments firms is surging.

Twitter, whose shares dropped below their IPO price earlier this week, needs a chief executive who eats, breathes and thinks in 140-character bites, 24 hours a day. Attempting to juggle both CEO roles, at companies in totally different businesses, would be a disservice to both sets of shareholders – among the largest of which is the 38-year old Dorsey himself.

If Jobs, whose best-known legacy is the $600 billion Apple, represents the gold standard for today’s striving executive, then perhaps running two disparate public companies could be seen as the ultimate goal. But it’s a rare human who possesses both the skills and the luck to achieve it without incurring the disgruntlement of at least one set of shareholders. Company boards should know better than to saddle investors with the risk of such an experiment.

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