When you’re talking about the past few years for Marriott International and its CEO, Arne Sorenson, it may be easier to talk about what hasn’t happened than what has. A $13 billion deal—the largest in the company’s history—for rival Starwood? Check. A cyberhack that resulted in unauthorized access to hundreds of thousands of customers’ data—and acres of painful headlines? Check. A series of labor strikes across the U.S.? Yup, that too.
That’s not all. There’s Airbnb, which is fast disrupting the travel business; the rise of anti-globalism, anathema to a company with hotels in 131 countries; and, of course, an endless series of highly public brushfires that come along with welcoming guests of every stripe, such as the LGBT community erupting in protest at the President of Brazil hosting an event at a Marriott in New York’s Times Square (he ultimately cancelled), to name just one.
The worst news came on May 3, when the company announced Sorenson, 60, had been diagnosed with stage 2 pancreatic cancer and would soon begin treatment.
All this would be enough to tank even the toughest CEO. Yet, on Sorenson’s busy watch, Marriott International has exploded in value. Revenue jumped from $12.7 to almost $21 billion over the past five years (through the end of 2018), while adjusted earnings per share were up 178 percent during that time. Total shareholder return? 154 percent versus 60 percent for the S&P 500.
Sorenson—who spends some 200-plus days on the road each year—is also one of the most high-profile and outspoken CEOs today. He’s put himself on record advocating for infrastructure investment, tax reform, LGBT rights, immigration, diversity—and simple decency (political and otherwise). Yet, somehow, he’s largely avoided the public tar-and-feathering that keeps many CEOs on the sidelines in these bruising times.
Taken together, it’s a bravura performance that led our selection committee (see p. 8) to name Sorenson Chief Executive’s 2019 CEO of the Year. “Marriott’s exceptional EPS growth track record in a rapidly changing sector is a testament to the leadership and strategic vision Mr. Sorenson has provided throughout his tenure,” said CEOY selection committee member Dan Glaser, CEO of Marsh & McLennan Companies.
“The complexity and globality of his business—with a major acquisition—demonstrated his leadership,” said Bob Nardelli, CEO of XLR-8 and former CEO of Home Depot. “His presence among other CEOs and recognition among peers was a real standout. Arne is a real role model for all CEOs.”
That’s especially true in this disruptive era. Trained as a lawyer, Sorenson had an unusual path to the corner office. He was personally recruited into the company in 1996 by Bill Marriott (our 1988 CEO of the Year) after representing Marriott in a lawsuit a few years earlier. By 1998, he’d been named CFO (“a risky move even in a pre-Sarbanes-Oxley world,” he says) and was named CEO in 2012—the first nonfamily member to hold the job in the company’s history. We sat down with Sorenson in late May at the company’s headquarters in Bethesda, Maryland, to hear more about how he takes on the turbulence—and maybe how the rest of us can do it better, too. What follows is edited for length and clarity:
The past few years for this company and for you have brought extraordinary change. Starwood, Airbnb, the data breach, your own personal health. How have you led through all of that?
It starts with a great team. Almost none of these things do you face alone. If you’re facing them alone, you’re probably in a dangerous place. Some of them, I think, require more of a singular decision, maybe, and some of them less. So, as an example, if you think about the last three years, we jump into trying to buy Starwood in October of 2015, that was a very intense period where the leadership team of the company was gathered around the table. But, ultimately, a decision had to be made. It had to be made by me. Now, the board, of course, approves everything, but was I going to present to the board the biggest transaction by far that the company had ever done? The prior deal would have been $1 billion. This was $13 billion and change.
The conversation around the table was robust, transparent—but not uniform. In that kind of classic circumstance, the CEO ultimately has got to say, “Okay, how am I going to resolve this less-than-totally-synthesized bit of input I’m getting and decide what kind of bet the company should make?”
Contrast that to the fall of 2018. We get a cyber hack that surfaces in September. We really couldn’t confirm that anything was taken until November. So, you’ve got a period of six weeks or so where you’re working like dogs to try and figure out as much as you possibly can and, then, ultimately, get to a place where you decide to disclose and what the strategy is around disclosure. There, in some respects, I am involved in the conversations daily but not necessarily bringing more expertise to that set of challenges and questions than a whole bunch of people at the table.
In both circumstances, you’re bred first to listen. So, even when the decision, ultimately, has to be made where the buck stops, if you haven’t gotten input from a team that feels like they can be transparent with you, you’re going to be supremely harmed in the decision that you make. So, in that sense, there’s a similarity, but the decisions made in the cyber context, the ones that I felt closest to, were more philosophical. We’re going to be transparent with our customers. We are not going to pay attention to the short-term ramifications of this because the name of the game is to maintain the trust that we have, and maybe even build on the trust we have by telling them what we know, by telling them as we learn more, what more we learn. Very different kinds of decisions, but every one fundamentally dependent on the right team around the table.