Companies Developing New Roles for Departing CEOs
One day, Amazon will have to learn how to live without its iconic founder, Jeff Bezos. Even though Bezos is stepping down as CEO of the e-commerce giant, that day doesn’t appear to be coming any time soon. Rather than retiring to live off a net worth equal to the GDP of a midsized country, he’s shifting to executive chairman of Amazon in the third quarter of 2021.
Amazon joined two other household name corporations, the global hotel chain Marriott International Inc. and drug manufacturer Merck & Co., last week in announcing major changes in their C-suites. The plans for their outgoing executives show how attitudes toward succession planning in the corporate sphere are continuing to evolve.
Marriott is facing a more unfortunate succession situation than the other two companies. CEO Arne Sorenson is handing off day-to-day duties to undergo treatment for pancreatic cancer. He has continued to work since Marriott disclosed his diagnosis in 2019, and the company said that will remain the case “to the extent practical.” Nevertheless, the hotel chain is divvying up his responsibilities between Stephanie Linnartz, the group president for consumer operations, technology, and emerging businesses, and Tony Capuano, the group president for global development, design, and operations services.
With its hand forced by Sorenson’s illness, Marriott is executing its succession plan in something like emergency conditions. Sadly, the pandemic has only underscored the fact that publicly traded companies should consider emergency succession plans a must-have for sound governance. Applied Materials, for one, appears to agree; in proxy materials the company sent out in late January (sub. req.), it noted it undertakes a “carefully designed, thoughtful, and long-term approach” to succession planning, but also has a break-glass-when-needed option. “[T]he Board also maintains a CEO emergency succession plan,” it said.
While Marriott may be in an emergency-like situation, Amazon and Merck, by contrast, have the luxury of building longer glide paths to phase out the tenures of their key leaders. For Bezos, that means freeing him of the responsibilities of a chief executive. Amazon’s founder can instead work on the type of big-picture projects that interest him. Meanwhile, Bezos can also carve out time to mentor his successor, Andy Jassy.
Kenneth Frazier of Merck & Co. will also assume the role of executive chairman after his final day as CEO on June 30. What that will entail isn’t quite as clear as in Bezos’ case. It bears mentioning that as one of a handful of Black CEOs at Fortune 500 companies, Frazier has become a prominent critic of racial inequities in American society and corporate culture. As executive chairman of Merck, he could devote even more time to advocacy work while maintaining a prominent role at one of the world’s leading pharmaceutical companies.
The smooth roll out of the succession plans at Amazon and Merck contrast with the shock that greeted Bob Iger, the former CEO of Disney, when he announced he was stepping down effective immediately this time last year. That abrupt transition is starting to look better in hindsight to observers who now see it as a logical response to the coming pandemic (the scope of which was not yet obvious), allowing the leadership of the future to chart the company’s response to that generational event.
One thing that Disney’s transition did have in common with Amazon’s and Merck’s is the fact that Iger stayed on in an executive chairman role. That feels like a happy middle ground for CEOs who still want to contribute at their companies but have tired of the daily grind. It may also be a fair compromise for investors who understand that trusted CEOs have earned their retirements, but who aren’t yet ready to see them leave the building.
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