1 00:00:00,880 --> 00:00:03,120 Speaker 1: This is the Bloomberg Business of Sports show, where we 2 00:00:03,160 --> 00:00:05,240 Speaker 1: explored the big money issues in the world of sports. 3 00:00:05,320 --> 00:00:08,200 Speaker 1: I'm Scarlet Fu and I'm Damien SaaS Hour and joining 4 00:00:08,280 --> 00:00:11,520 Speaker 1: us right now is Matt Boyle and Matt Matt, you 5 00:00:11,600 --> 00:00:14,880 Speaker 1: were you. What's your beat right now? It's everything related 6 00:00:14,960 --> 00:00:18,560 Speaker 1: to the workplace pretty much, and also management trends, okay, 7 00:00:18,640 --> 00:00:21,880 Speaker 1: And one management trend that is definitely in place is 8 00:00:22,520 --> 00:00:26,239 Speaker 1: CEOs or leaders who kind of stay past their welcome. Yeah, 9 00:00:26,239 --> 00:00:28,080 Speaker 1: they usually kind of do. It's weird how you give 10 00:00:28,120 --> 00:00:30,400 Speaker 1: people all that power and they don't ever want to 11 00:00:30,480 --> 00:00:33,240 Speaker 1: give it up. But I decided to take a look 12 00:00:33,240 --> 00:00:36,600 Speaker 1: at it. In the wake of Jim Beheim's ouster after 13 00:00:36,680 --> 00:00:41,000 Speaker 1: forty seven years as the head coach of Syracuse's basketball team, 14 00:00:41,360 --> 00:00:43,600 Speaker 1: and this is a you know, sort of similar because 15 00:00:43,640 --> 00:00:46,920 Speaker 1: he had said he was going to leave in twenty fifteen, 16 00:00:47,040 --> 00:00:48,959 Speaker 1: he said he had gone in three years, and then 17 00:00:48,960 --> 00:00:52,440 Speaker 1: oh lone behold didn't He ended up coaching his sons 18 00:00:52,520 --> 00:00:55,920 Speaker 1: and then of course COVID hit. But even as you know, 19 00:00:56,000 --> 00:00:58,200 Speaker 1: as as recently as February, he said he might come 20 00:00:58,240 --> 00:01:00,960 Speaker 1: back for another season, and he had a very very 21 00:01:01,000 --> 00:01:03,400 Speaker 1: mediocre year. This year, and this is a program that's 22 00:01:03,520 --> 00:01:06,840 Speaker 1: usually you know, it's not acceptable, exactly not acceptable there. 23 00:01:06,880 --> 00:01:10,039 Speaker 1: So I think the school finally said, look, Jim, it's time. 24 00:01:10,360 --> 00:01:12,280 Speaker 1: But it got me thinking about you know what about 25 00:01:12,319 --> 00:01:15,080 Speaker 1: corporate boards of directors. You know, when do they say 26 00:01:15,120 --> 00:01:18,440 Speaker 1: to a CEO who's very powerful, often on the board 27 00:01:18,480 --> 00:01:21,680 Speaker 1: as as chairman, you know, it's time to go. So 28 00:01:22,080 --> 00:01:24,240 Speaker 1: there is plenty of research on this about some of 29 00:01:24,280 --> 00:01:28,160 Speaker 1: it is about founder CEOs like Yet you know Bezos 30 00:01:28,280 --> 00:01:31,920 Speaker 1: or Fred Smith at FedEx. Smith is a very good 31 00:01:31,959 --> 00:01:34,880 Speaker 1: example of a CEO who probably should have left before 32 00:01:34,959 --> 00:01:36,720 Speaker 1: he did. And then also just sort of run of 33 00:01:36,760 --> 00:01:39,319 Speaker 1: the mill CEOs. You know, when when do they get 34 00:01:39,360 --> 00:01:43,080 Speaker 1: past their expiration date basically and what should boards do? So, Matt, 35 00:01:43,160 --> 00:01:45,880 Speaker 1: you know you've looked at a lot of other companies AIG, 36 00:01:46,400 --> 00:01:49,920 Speaker 1: Hank Greenberg, viacoms from the Redstone Uber, you know, you know, 37 00:01:50,240 --> 00:01:53,160 Speaker 1: talk to us about you know what your analysis has 38 00:01:53,320 --> 00:01:56,720 Speaker 1: uncovered at what point in the life cycle of a CEO, 39 00:01:57,320 --> 00:02:00,200 Speaker 1: um should they be leaving or thinking about leaving? The 40 00:02:00,200 --> 00:02:04,400 Speaker 1: average ten year of a CEO is usually around five, six, seven, 41 00:02:04,520 --> 00:02:07,840 Speaker 1: eight years. It fluctuates, but it certainly went up during 42 00:02:07,920 --> 00:02:10,480 Speaker 1: COVID because a lot of ceo said, this is an 43 00:02:10,560 --> 00:02:13,919 Speaker 1: unprecedented crisis. I'm not going anywhere. I got to stay 44 00:02:14,280 --> 00:02:16,560 Speaker 1: in the ship to steer it through these you know, 45 00:02:16,600 --> 00:02:19,799 Speaker 1: these choppy waters. So the average CEO ten year and 46 00:02:19,840 --> 00:02:23,840 Speaker 1: the SP five hundred during COVID went up over ten years, 47 00:02:23,919 --> 00:02:26,560 Speaker 1: which is not something you see often because a lot 48 00:02:26,600 --> 00:02:29,160 Speaker 1: of CEOs are just like, I got to stick around, so, 49 00:02:29,400 --> 00:02:32,960 Speaker 1: you know, but that is, you know, COVID is easing now. 50 00:02:33,080 --> 00:02:35,440 Speaker 1: You know, we're seeing now companies are sort of returning 51 00:02:35,480 --> 00:02:38,880 Speaker 1: to some sense of normalcy. But the problem though, is 52 00:02:38,919 --> 00:02:42,799 Speaker 1: that those CEOs who steered their companies through COVID are 53 00:02:42,840 --> 00:02:45,280 Speaker 1: deciding some of them at least, you know, I'm good 54 00:02:45,320 --> 00:02:48,440 Speaker 1: actually like targets. Brian Cornell, a company I know very 55 00:02:48,440 --> 00:02:51,799 Speaker 1: well from covering the retail scene. He had decided to 56 00:02:51,840 --> 00:02:54,239 Speaker 1: stay for another three years, which will put him past 57 00:02:54,919 --> 00:02:58,560 Speaker 1: what had been the mandatory retirement age at the company. 58 00:02:58,800 --> 00:03:01,360 Speaker 1: And then his friend at wal Mart, Doug McMillan. Again, 59 00:03:01,400 --> 00:03:03,960 Speaker 1: both of these CEOs have done a good job, but 60 00:03:04,120 --> 00:03:06,160 Speaker 1: McMillan is now saying he's going to stay for another 61 00:03:06,200 --> 00:03:08,920 Speaker 1: three years. So whether or not, there are you know, 62 00:03:09,160 --> 00:03:12,359 Speaker 1: activist investors screaming for them to get to you know, 63 00:03:12,480 --> 00:03:14,760 Speaker 1: to get to get away. Is not the point. It's 64 00:03:14,800 --> 00:03:17,400 Speaker 1: that this really screws up a company's succession plan. Yes, 65 00:03:17,480 --> 00:03:20,440 Speaker 1: you have all these you know, executives below them, the 66 00:03:20,520 --> 00:03:23,160 Speaker 1: next ranks who are thinking, when's my turn, when's my turn? 67 00:03:23,360 --> 00:03:25,320 Speaker 1: And then the CEO turns around and says, I'm going 68 00:03:25,360 --> 00:03:27,800 Speaker 1: to stay another three years, maybe five. So what does 69 00:03:27,840 --> 00:03:30,040 Speaker 1: that do to them? They usually take off and leave, 70 00:03:30,160 --> 00:03:32,240 Speaker 1: and then you have nobody on the bench when the 71 00:03:32,320 --> 00:03:35,440 Speaker 1: CEO eventually decides to go. I think of Disney with 72 00:03:35,480 --> 00:03:39,640 Speaker 1: Bob Eiger, where he kept pushing off his retirement, and 73 00:03:39,720 --> 00:03:42,080 Speaker 1: I think of Jamie Diamond at JP Morgan Chase, who 74 00:03:42,360 --> 00:03:43,960 Speaker 1: has at various points said I'm going to stay for 75 00:03:43,960 --> 00:03:45,800 Speaker 1: another five years, and then the five years comes up, 76 00:03:45,880 --> 00:03:47,960 Speaker 1: or maybe right before then, I'm gonna stay for another 77 00:03:48,000 --> 00:03:51,720 Speaker 1: five years, and all the seasoned executives who were below 78 00:03:51,800 --> 00:03:53,920 Speaker 1: him and who were excellent in their field end up 79 00:03:53,920 --> 00:03:56,520 Speaker 1: going somewhere else. Exactly. Fred Smith another example. He had 80 00:03:56,560 --> 00:04:01,480 Speaker 1: two really good air parents who took off twenty nineteen. Um. 81 00:04:01,760 --> 00:04:04,960 Speaker 1: You know, they did find a successor eventually, but still 82 00:04:05,040 --> 00:04:07,560 Speaker 1: you lose your best people when the CEO is just 83 00:04:07,920 --> 00:04:09,920 Speaker 1: and the problem of course lies with the boards. The 84 00:04:10,160 --> 00:04:12,200 Speaker 1: boards are the ones who should be in charge of 85 00:04:12,320 --> 00:04:15,800 Speaker 1: succession and figuring out, you know, who is the next generation. 86 00:04:16,160 --> 00:04:19,159 Speaker 1: And you know, unfortunately, certainly here in the US, boards 87 00:04:19,160 --> 00:04:21,040 Speaker 1: are pretty pliant, they're pretty you know, they do what 88 00:04:21,080 --> 00:04:23,760 Speaker 1: the CEO wants. Yeah, and those are corporate boards. I 89 00:04:23,920 --> 00:04:27,560 Speaker 1: would imagine at a university where the coach has a 90 00:04:27,600 --> 00:04:31,880 Speaker 1: winning track record and is beloved by the school, by 91 00:04:31,920 --> 00:04:35,320 Speaker 1: the alumni network, that it's even harder to exactly these 92 00:04:35,400 --> 00:04:39,080 Speaker 1: powerful constituencies, you know, whether it's boosters and you know, 93 00:04:39,120 --> 00:04:41,960 Speaker 1: alumni trustees. You know, everybody loves to get the picture 94 00:04:42,000 --> 00:04:44,120 Speaker 1: with the coach. Everybody wants to be you know of 95 00:04:44,200 --> 00:04:47,640 Speaker 1: courtside tickets, and that really just creates this sense of 96 00:04:47,720 --> 00:04:49,840 Speaker 1: you know, it's it's it's like a deity, it's a king. 97 00:04:49,920 --> 00:04:52,479 Speaker 1: You know, these people are kings on campus. Um, they're 98 00:04:52,480 --> 00:04:55,320 Speaker 1: getting paid like kings in many cases as well. Um, 99 00:04:55,520 --> 00:04:57,520 Speaker 1: so you have that going on as well. So there's 100 00:04:57,560 --> 00:04:59,520 Speaker 1: just you know, you really need to get just sort 101 00:04:59,520 --> 00:05:00,760 Speaker 1: of well, I mean, at the end of the day, 102 00:05:01,080 --> 00:05:03,320 Speaker 1: grow a spine, you know, and be able to tell 103 00:05:03,360 --> 00:05:06,400 Speaker 1: these these CEOs or coaches, you know it is time 104 00:05:06,440 --> 00:05:10,080 Speaker 1: to go, and you know, have that difficult conversation so 105 00:05:10,120 --> 00:05:11,760 Speaker 1: you don't have to have it now. Do you see 106 00:05:11,760 --> 00:05:16,000 Speaker 1: activists investors aggressively pushing for a succession plan. I know 107 00:05:16,040 --> 00:05:18,160 Speaker 1: that we got that a bit with Nelson Peltz and 108 00:05:19,080 --> 00:05:21,720 Speaker 1: Disney in the last couple of months, But in general, 109 00:05:21,760 --> 00:05:24,440 Speaker 1: are they actively saying to the board, you need to 110 00:05:24,480 --> 00:05:27,560 Speaker 1: do something more on this beyond get the share prices. Well, ye, 111 00:05:27,680 --> 00:05:29,400 Speaker 1: let's do something. But is it is it always going 112 00:05:29,440 --> 00:05:30,680 Speaker 1: to be get rid of the CEO? I mean, look 113 00:05:30,680 --> 00:05:33,800 Speaker 1: at Salesforce. Bennie Off is still there and actually has 114 00:05:33,839 --> 00:05:36,840 Speaker 1: gotten He's gotten rid of two co CEOs, not just 115 00:05:36,920 --> 00:05:38,880 Speaker 1: one co CEO. Because at the end of the day, 116 00:05:38,880 --> 00:05:40,599 Speaker 1: the activists are probably like, well, we want you know, 117 00:05:40,600 --> 00:05:42,880 Speaker 1: we want changes, but Mark is the one to implement 118 00:05:42,920 --> 00:05:46,040 Speaker 1: those changes. So you're not always going to have activists 119 00:05:46,080 --> 00:05:48,240 Speaker 1: saying get rid of the CEO. I'm going back a 120 00:05:48,279 --> 00:05:52,120 Speaker 1: few years, but you believer another Nelson Peltz example where 121 00:05:52,160 --> 00:05:54,280 Speaker 1: it was kind of time for Paul Pullman, who had 122 00:05:54,279 --> 00:05:57,719 Speaker 1: been a legendary CEO in Europe and in the US, 123 00:05:58,160 --> 00:06:00,760 Speaker 1: for him to go. Now granted his cessor they've got 124 00:06:00,800 --> 00:06:03,480 Speaker 1: in a lot of hot water. So you know, with activists, 125 00:06:03,480 --> 00:06:04,920 Speaker 1: I think they're often saying, you know, we got to 126 00:06:04,920 --> 00:06:07,039 Speaker 1: cut costs, we need to do this, we want to 127 00:06:07,040 --> 00:06:09,800 Speaker 1: be on the board. Um, But it's not their Their 128 00:06:09,920 --> 00:06:13,240 Speaker 1: recipe is not always ditched the CEO, because sometimes the 129 00:06:13,279 --> 00:06:15,440 Speaker 1: CEO is talking to them, let's just get it done. Yeah, 130 00:06:15,600 --> 00:06:18,960 Speaker 1: just get something done, get changed done. Um. But not 131 00:06:19,040 --> 00:06:21,360 Speaker 1: always is it going to be, you know, dumped the CEO, 132 00:06:21,440 --> 00:06:24,120 Speaker 1: because even the activists might be in frall to the 133 00:06:24,160 --> 00:06:27,320 Speaker 1: CEO as well, right right, right. You know, you mentioned 134 00:06:27,320 --> 00:06:29,840 Speaker 1: something about the difference between founder and non founder CEOs 135 00:06:29,839 --> 00:06:32,240 Speaker 1: in your in your report, and I wonder how that 136 00:06:32,480 --> 00:06:35,680 Speaker 1: differs from some of these legacy coaches like Beheim, like 137 00:06:35,800 --> 00:06:39,680 Speaker 1: Sashevsky and their successors. I mean, obviously Beheim and were 138 00:06:39,720 --> 00:06:42,719 Speaker 1: there for years and many can pretty much call them 139 00:06:42,920 --> 00:06:46,440 Speaker 1: the founder of those college basketball programs. Right, yeah, they 140 00:06:46,480 --> 00:06:49,440 Speaker 1: were good for exactly you know. But but but I 141 00:06:49,480 --> 00:06:51,240 Speaker 1: think it's a little bit different in corporate America. I 142 00:06:51,279 --> 00:06:53,320 Speaker 1: wonder if you could just expand on that. Well, I mean, 143 00:06:53,520 --> 00:06:55,880 Speaker 1: it's it's different, but you've raised a good point that 144 00:06:55,920 --> 00:06:59,120 Speaker 1: it's almost kind of similar Schevski and Beheim are almost 145 00:06:59,120 --> 00:07:02,040 Speaker 1: really seen there, you know, as the founders of certainly 146 00:07:02,040 --> 00:07:06,440 Speaker 1: the founders of those programs being seen as luminaries and 147 00:07:06,600 --> 00:07:09,120 Speaker 1: ones that everyone else wants to model. So if they 148 00:07:09,200 --> 00:07:11,280 Speaker 1: are the models for everyone else to follow, then other 149 00:07:11,280 --> 00:07:13,840 Speaker 1: coaches are going to say, well, they stayed forever. You know, 150 00:07:13,880 --> 00:07:16,560 Speaker 1: if I create a successful program, then I can stay forever. 151 00:07:16,920 --> 00:07:20,480 Speaker 1: And you don't have the boards of directors in a 152 00:07:20,560 --> 00:07:24,000 Speaker 1: university system sort of you know, hopefully being able to say, okay, 153 00:07:24,080 --> 00:07:27,080 Speaker 1: well you're doing a great job, but can we make 154 00:07:27,080 --> 00:07:29,640 Speaker 1: sure we have a succession plan in place. The problem 155 00:07:29,680 --> 00:07:33,160 Speaker 1: in sports, as you often see coaches do have great 156 00:07:33,200 --> 00:07:35,240 Speaker 1: coaches under them, but then they go They often go 157 00:07:35,280 --> 00:07:37,760 Speaker 1: off and get head coaching jobs elsewhere. That's an issue. 158 00:07:37,960 --> 00:07:39,840 Speaker 1: Does happen in corporate America as well. I mean, look 159 00:07:39,880 --> 00:07:43,200 Speaker 1: at Procter and Gamble, just a place where CEOs are created. 160 00:07:43,240 --> 00:07:46,400 Speaker 1: They have all these massive business units where the people 161 00:07:46,480 --> 00:07:49,120 Speaker 1: running those business units will often go grab a CEO 162 00:07:49,240 --> 00:07:52,200 Speaker 1: job elsewhere. So I think it's a problem in both cases. 163 00:07:52,240 --> 00:07:54,120 Speaker 1: I think corporate boards though the bottom line is they 164 00:07:54,160 --> 00:07:56,720 Speaker 1: need to be doing more. On the university level. You 165 00:07:56,800 --> 00:07:59,040 Speaker 1: just need to have again a little bit more willingness 166 00:07:59,080 --> 00:08:03,280 Speaker 1: to say, Okay, coach, you're great, butts, you know who's 167 00:08:03,360 --> 00:08:05,880 Speaker 1: what's the next generation? You know, please give us more 168 00:08:05,920 --> 00:08:08,760 Speaker 1: than one option, because your top option, your head. You know, 169 00:08:08,800 --> 00:08:11,320 Speaker 1: your favorite assistant is probably going to head off somewhere 170 00:08:11,320 --> 00:08:14,160 Speaker 1: else pretty soon. No one wants to risk a rebuilding 171 00:08:14,240 --> 00:08:16,400 Speaker 1: year or a couple of rebuilding years. Yeah, that's the 172 00:08:16,440 --> 00:08:17,800 Speaker 1: thing I mean. And no one wants to risk a 173 00:08:17,840 --> 00:08:21,440 Speaker 1: rebuilding stock as well, you know. And so yeah, with 174 00:08:21,480 --> 00:08:24,160 Speaker 1: these programs, it's just win now, win always, and that 175 00:08:24,200 --> 00:08:26,920 Speaker 1: really creates a lot of pressure on these places. Matt Boyle, 176 00:08:27,120 --> 00:08:29,320 Speaker 1: fantastic to get your take. Matt Boile, of course, for 177 00:08:29,400 --> 00:08:33,800 Speaker 1: years of retail industry reporter, now covering the shifting changes 178 00:08:34,040 --> 00:08:36,920 Speaker 1: at work in our workplace. Thanks so much. This is 179 00:08:36,960 --> 00:08:39,840 Speaker 1: the Bloomberg Business of Sports podcasts. I'm Scarlet Food here 180 00:08:39,880 --> 00:08:43,240 Speaker 1: with Damien sass Hour. Catch us every Monday, Wednesday and Thursday, 181 00:08:43,240 --> 00:08:45,320 Speaker 1: where we explore the world of money in sports. Also 182 00:08:45,360 --> 00:08:47,240 Speaker 1: find me on Twitter at Scarlet Food and you can 183 00:08:47,280 --> 00:08:49,680 Speaker 1: catch me on Twitter at d Sasur. You're listening to 184 00:08:49,679 --> 00:08:52,679 Speaker 1: Bloomberg Business of Sports from Bloomberg Radio around the world.