Is There a CEO Expiration Date? Or Will Mark Zuckerberg Rule Forever?
February 8 2012 by ChiefExecutive.net
In the prospectus for its IPO, Facebook went to great lengths to protect its leadership, aka mega-CEO Mark Zuckerberg. All shares issued to the public will have limited voting rights, according to The Wall Street Journal.
So how long, exactly, does Mark Zuckerberg plan to run Facebook? The average tenure of a public company CEO is 6.5 years, but it seems as though Zuckerberg plans to settle in for the long haul. Is this the best thing for Facebook and its future shareholders, or is this the best thing for Zuckerberg’s wallet?
A study by Booz & Co., “CEO Succession 2000-2009: A Decade of Convergence and Compression” shows that CEO turnover was on the rise from 2000-2009. The study stated that the CEO job is getting, “shorter and more intense, the margin for error or underperformance is narrow, and the role of CEO increasingly excludes the job of also being chairman.”
Just look at HP, former CEO Leo Apotheker was at the helm for less than a year.
Tech and social media companies in particular evidence strong changes in leadership just to survive subsequent changes to their business model. Look at AOL, Yahoo and even Google. All had to have “adult supervision” at some point. This is why the Google founders opted for Eric Schmidt to run the firm so that the founders could learn enough before letting go of the training wheels. That’s why Steve Jobs was pushed aside by the Board in the 90s to let John Sculley run things (before Jobs returned).
According to NYU Finance professor Aswatch Damodaran, “You’re buying [Mr. Zuckerberg's] stewardship for as long as he chooses to run the company, and that might be too long. To justify the price, you have to assume the management will always be managed to perfection. And I like what [Mr. Zuckergerg] has done so far, but I’m not willing to put my faith in him for perpetuity.”
How long is too long for a public company to have one CEO? Although Zuckerberg has proven to be a smart business leader, is it really in Facebook’s best interest to allow him to run the company for as long as he wants? You cannot know what you don’t know. When it hits you between the eyeballs it may be too late.