There can be only one: Why having co-CEOs at a company almost never works

Chipotle and Whole Foods are the latest to abandon the structure.
Chipotle and Whole Foods are the latest to abandon the structure.
Image: Reuters/You Sung Ho
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Leadership tends to be a singular thing. We like to have one person in charge. One president, one head coach, one king. And almost always, one CEO.

The co-chief executive officer structure, never widespread, is increasingly falling out of favor. Yesterday, Chipotle said longtime co-CEO Montgomery Moran will step down, leaving remaining CEO Steve Ells in charge. That follows last month’s announcement from Whole Foods, where co-founder John Mackey becoming sole CEO and Walter Robb stepping aside.

The co-CEO is the knuckleball of management: unorthodox, hard to master, but, on occasion, highly effective. According to Fortune, only 22 companies of the 500 largest US companies employed co-CEOs since 1989. The structures usually arise in response to specific situations, like a merger or boards hoping to keep management talent from leaving.

There’s been some notable failures, mainly caused by rifts between the CEOs. The dual leader set up at Martha Stewart Living Omnimedia collapsed after a year in 2009. “Of course, there was tension,” chairman Charles Koppelman told Fortune after the experiment ended. And it came as no surprise to most observers that the titanic egos of Sandy Weill and John Reed couldn’t function as co-CEO when Weill’s Travelers merged (paywall) with Reed’s Citicorp in 1998; the shock is that they worked together for almost two years.

At Oracle, the jury is still out. Mark Hurd and Safra Catz were promoted by founder Larry Ellison to replace him when he retired in 2014, but given Ellison’s continuing influence on the company as “executive chairman,” it may be that neither are truly in charge.

But there are a few successful pairings of CEOs at large corporations, and they have specific reasons for persisting. American Financial Group is run by Carl and Craig Lindner, sons of its longtime CEO. KKR has grown from a partnership between Henry Kravis and George Roberts into a private-equity goliath, but they remain co-CEOs and co-chairmen.

More companies should consider dual CEOs, according to research into a hundred such pairings by a team of business professors published in the Financial Review in 2011. Co-CEOs work best when have complementary skills or educational backgrounds, so that one shores up the other’s weaknesses and they effectively supervise each other. Intriguingly, they also said that companies with co-CEOs tend to be valued higher.

So why don’t companies try it? Boards tend to be conservative, and are reluctant to tinker. CEOs, too, are resistant. After spending years climbing the corporate ladder, few leaders want to share the top rung.