23/08/2020 Co-CEOs are out of style. Why is Netflix resurrecting the management model?

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NETFLIX · Published July 17

Co-CEOs are out of style. Why is Netflix resurrecting the

management model?
Plenty of companies have tried the twin CEO approach, with mixed results

The Wall Street Journal

Netflix poised to lead streaming wars: Market watcher

BMO Capital Markets chief strategist Brian Belski discusses biotech stocks, investing in
coronavirus markets and says he is expecting good earnings from Net ix amid the
streaming wars and lockdown.

Net ix Inc.’s decision to elevate the company’s chief content o cer to co-chief

executive, sharing the power and the spotlight with co-founder Reed Hastings,
highlights a relatively rare management arrangement: dual chief executives.

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NETFLIX INC.

In the S&P 500, few companies have co-CEO arrangements, and a number have recently
abandoned the structure, slimming down to a lone executive at the helm.

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COMPANY

Salesforce.com Inc. ended its 18-month experiment with twin-CEOs in February, leaving

Marc Benioff at the top. German software giant SAP SE ditched its dual-CEO model in

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23/08/2020 Co-CEOs are out of style. Why is Netflix resurrecting the management model? | Fox Business

April after less than six months. Oracle Corp. in December said it wouldn’t return to a
two-CEO arrangement following the death of co-CEO Mark Hurd, leaving Safra Catz as
the company’s sole chief executive.

Human nature prevents many co-CEO setups from succeeding, corporate governance
experts say. Dual bosses can leave employees confused about who holds ultimate
decision-making authority, and competitive tensions can are, breeding con icts at the
top, says Charles Elson, director of the Weinberg Center for Corporate Governance at
the University of Delaware.

“Co-CEOs rarely work,” he says. “Two heads are not better than one.”

In naming programming chief Ted Sarandos as a co-CEO, longtime Net ix chief Reed
Hastings said Thursday that the company was formalizing how it already ran its
business. Mr. Sarandos has been at the helm of content creation and runs Net ix’s Los
Angeles headquarters. The move is also widely seen as setting up Mr. Sarandos, who is
joining the company’s board, to eventually succeed Mr. Hastings.

NETFLIX NAMES TED SARANDOS CO-CEO, SHARES A 'FORMAL' ROLE WITH REED
HASTINGS

Unlike some other co-CEO arrangements in the past, Mr. Sarandos and Mr. Hastings
appear to have distinct domains. Mr. Sarandos will remain chief content o cer,
overseeing the company’s vast original programming efforts and entertainment
offerings, while Mr. Hastings is expected to continue focusing on the company’s overall
strategy and technology.

“In terms of the day-to-day running of Net ix, I do not expect much to change,” Mr.
Hastings said in a blog post.

Mr. Hastings has been known to embrace the unorthodox. He has a management book
coming out in September called “No Rules Rules” about the more than 20-year-old
company’s disruptive culture and habit of reinventing itself. In an investor video
Thursday, Mr. Hastings said he planned another decade at the company.
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23/08/2020 Co-CEOs are out of style. Why is Netflix resurrecting the management model? | Fox Business

“As co-CEO, it’s two of us full-time, it’s not like a part-time deal,” he said. “This is de nitely
broadening the management team, and helping us grow even faster.”

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Even with clear responsibilities, navigating a co-CEO dynamic can be challenging,

experts say. Among the largest U.S. public companies by revenue, only two currently
have a co-CEO structure, according to research rm Equilar. They are insurer American
Financial Group Inc., run by brothers Carl Lindner III and Craig Lindner,
and Markel Corp., a holding company that primarily sells insurance and named dual
chiefs in 2015.

The coronavirus era only complicates leadership matters. When SAP moved away from
its dual-CEO structure in April, it cited the need for clear decision-making during the
crisis. Co-CEO Jennifer Morgan left the company, while Christian Klein took the reins as
the company’s sole chief.

“More than ever, the current environment requires companies to take swift, determined
action which is best supported by a very clear leadership structure,” the company said
at the time.

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Jeffrey Sonnenfeld, a Yale School of Management professor, said Net ix’s Mr. Hastings
has repeatedly de ed critics over the years, transforming the company from a DVD-by-
mail operation into a streaming behemoth. Still, he expressed skepticism that Net ix’s
new executive arrangement would prove long-lasting.

“These co-CEO relationships are really almost always unstable, with very few exceptions
to that rule,” he said. “I bet your life on it that it won’t last.”

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