Co-CEOs and Investor Relations

What the financial community will expect…

Last month, HBO aired the grand finale of Succession. After four seasons of corporate treason, corporate governance scandals, failed transactions and personal drama, we finally found out who succeeds Rogan Roy at Waystar Royco, the multimillion-dollar media and entertainment conglomerate. Don’t worry, we’re not sharing any (important) spoilers.

Following a major event, Waystar Royco’s board appoints Kendall and Roman Roy, brothers and sons of the former CEO and Chairman, as interim Co-CEOs. Taking a look at how the scenario unfolds in reality: what would this decision mean from an Investor Relations perspective? What questions would your analysts and investors ask?

Co-CEO announcements are often met with skepticism, but under the right circumstances and with the proper structure there’s a favorable correlation between shared CEOs leading a company and strong business performance. According to a 2022 Harvard Business Review study, the 87 publicly traded companies with co-CEOs outperformed their peers, reflected in a 9.5% average annual shareholder return- compared to the 6.9% average for each company’s respective index.

Aside from the ongoing debate: what should companies and boards expect from a Co-CEO arrangement? What will the market want to know? Below are some important considerations that IROs and their teams should be prepared to address:

  • Context and rationale: The most pressing question will be: Why now? IROs need to clearly understand and communicate this decision’s underlying reasons, proactively addressing and mitigating expected apprehension and concern to instill financial market confidence. Is the company facing a crisis requiring an additional layer of expertise at the helm? Is the company performing well and is co-leadership part of the broader long-term strategic plan? Companies need to be prepared to clearly and transparently communicate the rationale and provide contextual color. For example, mergers and acquisitions often drive a company to opt for Co-CEOs, or family business succession (i.e. the Roys).

  • Expertise and skillsets: CEOs are largely expected to be seasoned professionals with a broad range of skills and expertise. So the market will want to know: What does this new CEO partnership bring to the table? Are each CEO’s skills and experience complementary, and are these closely aligned with your broader strategy? The financial community will need to understand how the two professionals complement each other and why their partnership is essential and uniquely relevant to your long-term vision.
  • Compensation: The market is always focused on leadership compensation, more so in a Co-CEO partnership scenario. How will the dual CEO role be compensated and incentivized, also relative to only one CEO and/or the prior CEO? What are the team’s KPIs; how will performance be tracked, measured, and rewarded? Communicating the clear details and specifics are again important here- a clear and well-articulated business case will drive confidence in this decision.
  • Tenure: Is this Co-CEO role temporary? What’s the timeline? How does this format impact your longer-term succession planning? Appropriately managing market and the Company’s broader constituency’s expectations is crucial. Sharing clear details of a well-defined long-term vision is invaluable in building confidence and trust.
  • Accountability, responsibilities, and shareholder relations: Clearly defined roles and responsibilities are also instrumental in ensuring accountability. Your financial constituency will look to understand relevant performance metrics, reporting expectations, and how risk will be addressed and managed by your new Co-CEOs and then communicated by you, the IR team.
  • Governance: Another important Co-CEO leadership concern is management inefficiency, particularly in decision making. Which protocols have you put in place to ensure an efficient decision-making process? How could this potentially adversely impact corporate governance? Your team needs to be prepared to head off these questions with substantive details and be ready to confidently explain how your management and board has already envisioned this partnership’s future success while you transparently address potential hurdles.

So did the Succession management team address the above? We think not, which is also why things didn’t work out to plan. Or did it? It was fun to watch, but our experience tells us it’s less fun to endure without being appropriately prepared.

To learn how InspIR Group can help you to effectively integrate IR to drive best practice communications, please contact us at:

Monique Skrunzy: monique@inspirgroup.com | +1 212-661-2243

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