Having a CEO who is basically synonymous with a brand isn’t all that rare — especially in tech.
It can be a good thing: it puts a human face on a corporation, according to Margarethe Wiersema, professor emeritus at The Paul Merage School of Business at the University of California, Irvine.
“A company is kind of abstract — like, who is McDonald's?” Wiersema said.
That company’s CEO is Chris Kempczinski — not a household name. But think Tesla or SpaceX — that’s Elon Musk.
OpenAI — that’s Sam Altman. A celebrity CEO who resonates with the public can generate more customers, Wiersema said.
Plus, CEOs matter to analysts who rate whether public company stocks are worth buying.
“When they evaluate these companies, the CEO is a large part of that valuation,” Wiersema said. Investor confidence in a CEO can drive a stock price up.
But there’s also a lot of risk in tying a company’s fortune to one person. Attitudes among the public and investors can change.
“In the past, maybe you have a CEO whose identity really kind of resonates with the customers or the broader community, but that doesn't necessarily mean that that's going to continue into the future,” said Yo-Jud Cheng, professor of business administration at the University of Virginia.
When the public turns on a CEO, and maybe it turns to competitors. Not great. The other risk is if something unexpected happens to that famous CEO — say, a medical crisis. Or they’re found to have had an affair with a suspected spy. Then what?
That’s why it’s important for corporate boards to do succession planning, Cheng said.
“I think it should always be kind of on the back of the board's mind of like, ‘Okay, who's next?’” Cheng said. |