In September 2013, in a darkened auditorium, Microsoft’s chief executive, Steve Ballmer, faced a roaring crowd of his employees. “You work for the greatest company in the world,” he bellowed. “Soak it in!” Ballmer was known for his exuberance. He had been nicknamed “Monkey Boy” for the bar-mitzvah-style dance moves he deployed to motivate employees at another company meeting. He once damaged his vocal cords while giving a presentation on software.
Even so, there are few scenarios in which a middle-aged corporate executive can be treated like an aging rock star by thousands of fawning employees. But on this day, Ballmer was doing something truly admirable: He was retiring. “Microsoft is like a fourth child to me,” he said as he left the company’s stage, his eyes glistening with tears, to the opening chords of “(I’ve Had) The Time of My Life.”
Ballmer’s retirement earned him the corporate equivalent of a Viking’s funeral. But most people seemed to agree that his departure, 14 years after he took over the company from his college classmate Bill Gates, should have happened years earlier. Around the time Ballmer announced his plans to go, the company’s stock price was lower than when he started the job. The media was bemoaning Microsoft’s “lost decade.” While its tech rivals had seized on new markets, Microsoft had changed fairly little. Apple dominated smartphones, Google prevailed in search and giants like Facebook — which didn’t even exist when Ballmer took the reins — stood atop a whole new sector of the economy. With the arrival of Ballmer’s successor, Satya Nadella, Microsoft’s stock price soared.
Of the many riddles that confront corporate chief executives in the course of their work, perhaps the most important is when to quit. It’s the maneuver that cements a C.E.O.’s legacy. The cost of overstaying is steep, especially when tallied in missed opportunities: Ballmer famously scoffed at the invention of the iPhone, believing that businesspeople would never want it because it didn’t have a keyboard. Reflecting on Ballmer’s leadership, the Harvard Business School executive fellow Bill George told me: “It was obvious certainly at the 10-year mark, maybe before, what he was doing was cheering on the strategies Bill Gates had put in place.”
Over the last several decades, as Americans have lived longer, career has become the ascendant source of meaning in a country increasingly eschewing religion. And now, perhaps inevitably, workers of all kinds and levels say they are going to defer retirement. That’s especially true of striving and hard-driving institutional leaders; just look to Washington D.C. But particularly for the people running corporate America, the reasons to overstay in leadership are even more compelling. There’s the authority, the personal assistant, the corner-office views, the feeling of being needed, the flattering, the deference and, of course, the money. American chief-executive pay in 2022, across the S&P 500, averaged $16.7 million. When power and pay is that densely concentrated, people will cling to it whether or not it’s good for business.
The executives with the longest tenures — Warren Buffett of Berkshire Hathaway (54 years), Jamie Dimon of J.P. Morgan (18 years) and Jensen Huang of Nvidia (31 years) — often get to stay so long because they’re considered effective. But even for them, long tenures can become excessive and ill advised. A chief executive who overstays might make a rushed decision about succession — and putting the wrong person in charge can be unimaginably costly.
But just what constitutes overstaying is hardly clear. The ideal tenure is 4.8 years according to a group of researchers scattered across several universities in the United States and China who studied 356 businesses from 2000 to 2010 and tried to measure their health with factors including stock price and product quality. It could very well be longer. When the search firm Spencer Stuart examined every S&P 500 chief executive over more than two decades, it determined that the companies had some of their highest performing years once their chief executives had put in 11 to 15 years of their own. And according to George, the sweet spot is around a decade.
After advising dozens of chief executives over the years, George has found that when top bosses stay too long, they become risk-averse. He believes that long-serving leaders tend to fixate on short-term stock prices because they crave validation of the strategies that defined their tenure. With every passing year, it gets harder for them to accept when they are being shortsighted — that’s just part of the job.
“Most leaders, left to their own devices, will not know when it’s the right time for them to leave,” says Ranjay Gulati, a professor at Harvard Business School. “It’s really hard to stay grounded and humble when everyone is telling you you’re right.”
In the early 1980s, with C.E.O. compensation and corporate profits ballooning, Jeffrey Sonnenfeld, now a professor of business at Yale, embarked on a project to interview 100 of the country’s top chief executives and study their retirement plans. The result was his 1988 book, “The Hero’s Farewell,” in which Sonnenfeld maps C.E.O. approaches to retirement onto a matrix partly inspired by the psychoanalyst Otto Rank, a student of Sigmund Freud’s. On the Y axis is the desire to be immortal; on the X axis is the desire to be seen as a hero.
In Sonnenfeld’s taxonomy, the executive who wants both heroism and immortality is the “monarch,” like Rupert Murdoch of Fox or Sumner Redstone of Viacom. The executive driven mainly by heroism is the “general,” like Disney’s Bob Iger, who was ready to move on but felt called back to clean up a corporate mess. The executive who wants to be immortal is the “governor,” someone who hops from one C.E.O. job to the next. And the executive driven by neither is the “ambassador,” comfortable with stepping back and having good relationships with successors. Paradoxically, it’s those executives so attached to their reputations that they can’t move on who can end up ruining the legacies they painstakingly built.
When Sandy Weill was the top dog at Citigroup, he was clear about what he sought in a successor: loyalty. He recommended Chuck Prince, who, Weill recounted in his memoir, “understood my thought process like no one else.” Weill called up Prince and invited him to the Adirondacks for the Fourth of July weekend in 2003, intending to offer up the job. Prince balked because he wanted to spend the holiday in Nantucket with his fiancée, so Weill recalled offering to fly him back and forth. In the end, Prince accepted the role. Weill celebrated, seemingly content with the transition process, which he detailed in his book “The Real Deal,” released three years later.
But perhaps the tell-all came too soon. In the two years that followed its publication, Citi was toppled by the financial crisis, torpedoed by its own risky investments, watched its shares plummet from $55 to about a dollar, lost billions of dollars and had to be repeatedly bailed out by American taxpayers. Prince was pushed out, and he and Weill stopped speaking. In interviews at the tail end of the financial crisis, Weill conceded he had failed in his approach to succession and blamed many of the bank’s problems on Prince. (Weill did not respond to a request for comment. Prince declined to comment.)
Sonnenfeld views Weill as a classic example of a monarch, someone whose drive for legacy prompted him to overstay. Monarchs tend to surround themselves with loyalists, creating boards that are loath to push them out. But the reasons C.E.O.s on the verge of retirement often avoid it are, generally speaking, more predictable.
“I won’t have a jet!” That’s what Peter Crist tends to hear from executives wondering whether to retire. Crist is a corporate recruiter who has been advising executives for nearly 50 years. “I need more airplanes,” he says. “I need more trappings. That’s definitely in the DNA of some people — not all — who just cannot give up the reins.”
“Everywhere you go, people defer to you,” is what Bob Sutton, a former Stanford professor and an executive adviser, often hears from those resisting retirement. One corporate leader, Toby Cosgrove, told him: “When I became C.E.O. of the Cleveland Clinic, I became better-looking, and my jokes got funnier.” (“There’s no question my jokes got funnier,” Cosgrove told me.) Sutton describes why executives overstay in leadership using a mnemonic device, the four “P”s: power, prestige, privilege and pay. Given that so many are male, one of his colleagues added, there might be a fifth as well.
Charles O’Reilly, a Stanford professor who studies narcissism in leaders, noted that many come to believe almost messianically that they are the sole figures capable of steering their companies, a belief reflected in the Silicon Valley joke about Oracle’s chief executive who stayed on 37 years: “The difference between God and Larry Ellison is that God doesn’t think he’s Larry Ellison.”
After a C.E.O. spends close to 20 years running a company, and after hauling that company from financial precarity to prosperity, it’s tempting for him to believe that nobody else is qualified for the top job. “You interview a million people, and you will be hard pressed to find anyone who loves his company and loves what they do as much as I do,” says Greg Brown, 63, who has been chief executive of Motorola since 2008. “I don’t even consider it work. I don’t have hobbies.”
The chief executive of KnowBe4, a Florida-based cybersecurity company, reacted to the notion of retirement as though he had been nudged to wear his dirty laundry to the office. “Oh my God, retirement? Boo! Hiss!” said Stu Sjouwerman, 67, who has run the company since its founding 14 years ago, waking up at 6 a.m. to chug matcha tea and spending weekends writing newsletters on industry trends for his customers. (“I feel 25!” he told me.) Asked when he would be ready to step down as chief executive, Sjouwerman didn’t skip a beat.
“When I die,” he said.
Then he turned to his chief of staff, chuckling, to repeat both the question and his own response: “Lauren, ‘When do you know you’ll be ready to step down as C.E.O.?’ When I die!” She burst out laughing, right on cue.
Chip Bergh, who ran the denim company Levi’s for nearly 13 years, might fall into Sonnenfeld’s “ambassador” camp. Bergh, 66, retired this spring. When he started, the company was in a slump. During his tenure, its revenue grew by 55 percent, and last year Levi’s was the top-selling denim brand worldwide. When Bergh arrived at the company, he decided to focus on making the brand feel relevant again. He seized on moments when celebrities wore Levi’s — like when Beyoncé wore cutoff shorts at Coachella in 2018 — and pushed products like the now omnipresent T-shirts with the red “bat wing” logo. He also knew that his priorities wouldn’t sustain company growth forever.
Bergh’s board members, he recalled, encouraged him to pick a “mini Chip” as his successor. But he was more interested in someone with new talents. He and the board chose Michelle Gass, who previously ran Kohl’s and had retail experience to offer. Levi’s is trying to sell more directly to customers in its own shops, instead of in the crowded corners of superstores.
Bergh has been out of the job for roughly three months. “I can honestly say I don’t really miss it,” he told me. But Bergh may be unusual; most chief executives find the transition daunting. “Many are terrified about life after power,” says Jim Citrin, who leads the C.E.O. advisory group at Spencer Stuart. “They’re terrified that they’re not going to have their phone calls returned.”
“They get home, their kids yell at them, their wife complains they’re not paying attention and they’re told to do the dishes and go shopping,” says Sutton, the executive adviser. O’Reilly, the Stanford professor, remembers speaking with one chief executive who woke up the morning after retiring, agreed to get breakfast with his wife and then unthinkingly got in the back seat of his car expecting to be chauffeured.
In 2022, Eileen Fisher announced that she was transitioning out of being the C.E.O. of her apparel company, but has stayed so involved that her successor has a metaphor to describe their different leadership styles. “I joke that she’s the fun mom who lets everyone stay up late having a dance party,” Lisa Williams, the new chief executive, says. “I’m the uptight mom fretting about getting the people to bed on time with the next day’s lunch already made.”
The night that Steve Ballmer stepped down from running Microsoft, he went out to dinner with his best friend and his wife at a swanky Seattle restaurant, and got emotional thinking about who he would be when he wasn’t in charge of a $300 billion company, when his email address wasn’t [email protected]. It was hard to picture — that life would continue when thousands of people weren’t hanging onto his every decision, that the company’s software would keep humming along without him in charge.
“People say, ‘Well, I love what I do — will I ever love anything else as much?’” Ballmer, now 68, told me recently. “The message I would have for people is that it is an abyss. But life’s going to change at some point anyway.” He has mixed emotions about post-Microsoft life. Though he misses the all-consuming sense of purpose, he did regain some freedom: “There’s nobody other than my wife who can tell me how to spend my time.”
In June, Bill George, the Harvard Business School fellow, will teach a newly added course for former chief executives on how to fill their lives after corporate leadership. When he’s doling out advice to these almost-retirees, he tends to recycle a few nuggets of wisdom: Don’t make commitments for the first year; involve your spouses in decisions about where to live and what to chase next. He runs people through a checklist of questions. How is succession shaping up? What parts of your personal life have you been neglecting? But George’s basic advice would be familiar to anyone staring down retirement: Stay busy.
That’s something that Garry Ridge, 67, the former head of WD-40, has taken seriously. When Ridge stepped down after 25 years leading the household lubricant company, he lined up a bunch of work, including coaching other C.E.O.s on topics like succession, and working on his book, “Any Dumb Ass Can Do It.” Ridge has had to adjust to no longer having his executive assistant, Holly, manage his life. He has recently learned how to use calendar apps. And he confesses that if he hadn’t had shareholders to answer to, he might have handled stepping down differently — less like an ambassador and more like a king.
“If WD-40 was a private company,” he says, “I’d probably be a bit like Warren Buffett and say ‘I’m never leaving.’”
Prop stylist (opening pages): Noemi Bonazzi
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