The Man in the Gray Gulfstream
Can commuting CEOs succeed?
Steve Heyer, the CEO of hotel company Starwood, resigned this week, the victim of boardroom politics. In his 30 months on the job, Heyer, a former president and chief operating officer of Coca-Cola, apparently didn't make many friends at Starwood home base in White Plains, N.Y. Board member Steven Quazzo told USA Today that the company wants a successor who can create a "positive work environment."
Starwood learned something else from the tenure of Heyer, who continued to live in Atlanta while he ran the company. According to USA Today, "Starwood also will require the next CEO to relocate to Starwood's headquarters."
The phenomenon of the long-commuting blue-chip CEO is a strange but oddly prevalent one. After all, it would seem to be a necessary requirement for this all-consuming and high-paying job that the CEO have his primary residence within a short Town Car's drive of head office. With the salaries they earn, CEOs can pretty much always afford to live near the corporate HQ, even if they are located in pricey areas like Westchester. (And, in Heyer's case, what precisely is there to recommend Atlanta over New York?)
Many long-commuters are simply evolved men who are sensitive to the desires of their teenage kids not to move in the middle of high school. High-powered banker James Dimon moved to Chicago after becoming CEO of Bank One in 2000. When he returned to New York as CEO of J.P. Morgan Chase at the end of 2005, he decided to leave the family in Chicago until his daughter graduates from high school. ConAgra, based in Omaha, Neb., hired Gary Rodkin to turn around the company in the summer of 2005. As the Wall Street Journal noted, Rodkin's deal with ConAgra gives him an apartment in Omaha for two years and free jet flights to take him home to Greenwich, Conn., on the weekend. Why? "Mr. Rodkin says he requested the perks because he didn't want to uproot his daughter, who is a junior in high school."
For some, the lack of proximity to headquarters clearly isn't an issue. Gary Loveman, the Harvard Business School professor turned CEO of Las Vegas-based casino company Harrah's, commutes to work from a Boston suburb. And it seems to work. As described in Competing on Analytics, a new book by Thomas H. Davenport and Jeanne G. Harris, Loveman's success relies less on an ability to look pit bosses in the eye and more on data-mining.
Other CEOs have made a positive virtue of not living in the place where their company is located. "I have little distraction—I work more than I would if my family was here," Rodkin told the Wall Street Journal. John Huey, the editor in chief at Time Inc., lives in South Carolina but works in New York, in one of the most New York-centric of industries, big-time magazine journalism. The fact that he wings south on the weekends gives Huey a psychological edge over his ambitious co-workers. He can profess not to care about who's having lunch with whom at Michael's—even as he lunches at Michael's—all while lording it over the insecure urbanites who produce magazines designed to appeal to the masses with whom they have little contact. As he told Kurt Andersen: "At Time Inc. in discussions I frequently describe myself as 'the American.' "
Some CEOs believe it just doesn't matter where a CEO "lives" or "works." Expecting the boss of a global enterprise to be rooted to a single place would be like expecting Thomas Friedman to spend all his time in Washington, D.C. The Wall Street Journal reported on Heyer: "He knew he would travel so much for his CEO job that he felt where he lived wasn't relevant."
Of course, it didn't work out so well for Heyer. Unless you're a genius like Loveman or a skilled and highly respected boss with a cadre of loyal, competent lieutenants, like Dimon, it can be hard to pull off. Especially if things aren't going well at the company. Commuting CEOs incur expenses—symbolic, marginal expenses, but expenses nonetheless—to maintain a second residence and for private jet flights home on the weekends. That's particularly problematic at struggling companies where executives and shareholders at all levels have been forced to bite the bullet. Mark Fields, who has been president of Ford's Americas operations since the fall of 2005, was criticized for using corporate jets to commute from Michigan to his home in Florida on the weekends. In January, he decided to take dramatic action. He agreed to start flying commercial. * (Moving from Florida to the Detroit suburbs, one suspects, would be far too dramatic.)
Generally, it's tough to sympathize with CEOs, overcompensated and underaccountable as they are. But I can understand why they are less than enthusiastic about pulling up stakes to take new jobs. Consulting firm Booz Allen found that in 2005, a record 15.3 percent of CEOs at large firms either resigned or were fired. The average tenure of a CEO today is just 7.9 years. Uproot your family, place the kids in a new school, and by the time you figure out where the Starbucks is and get initiated into a golf club, your tenure could be half over.
* Correction, April 10, 2007:This piece originally stated that in January 2007, Ford Americas president Mark Fields started paying for his own transportation from Michigan to his home in Florida. In fact, the switch was from the company jet to commercial but still on Ford's dime. Click here to return to the corrected sentence.
Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at firstname.lastname@example.org and follow him on Twitter. His latest book, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, has just been published in paperback.
Photograph of Steven Heyer by Jennifer Graylock/Associated Press. Photograph of jet on Slate's home page courtesy Cessna Corp./Newsmakers.