If having multiple CEOs is better for stock market returns, Oracle is quadrupling down

Some studies have shown that having more top leaders means better stock market returns. If you’re a believer in that theory, wait until you get a load of what Oracle is doing. 

The behemoth hyperscaler just announced that its CEO for the past 11 years, Safra Catz, is stepping down and being replaced by two new co-CEOs. 

If that seems like a drastic change, let me stop you right there. For all intents and purposes, Oracle is run by its gazillionaire founder Larry Ellison, the second-richest person on the planet. Ellison, naturally, is not actually Oracle’s CEO — he is officially the chairman of the board and chief technology officer. But as a former Oracle exec said to me this morning: “Larry is the real boss. Nobody should think otherwise.”

Next up in the pecking order is likely Catz, who was Oracle’s CEO until today. She is now the executive vice chair of the board, but in the press release announcing the changes, Ellison said, “Safra and I will be able to continue our 26-year partnership — helping to guide Oracle’s direction, growth, and success.”

And then there are the guys who now have the actual title: Clay Magouyrk and Mike Sicilia, two heads of units within the company, have been announced as Oracle’s new co-CEOs. It’s not a stretch of the imagination to think that Oracle now has not one, not two, not even three, but four CEOs.

Some would say that’s a good thing. A Harvard Business Review analysis shows that public companies with co-CEOs have tended to outperform those with single CEOs. From the study:

“We recently took a careful look at the performance of 87 public companies whose leaders were identified as co-CEOs. We found that those firms tended to produce more value for shareholders than their peers did. While co-CEOs were in charge, they generated an average annual shareholder return of 9.5% — significantly better than the average of 6.9% for each company’s relevant index. This impressive result didn’t hinge on a few highfliers: Nearly 60% of the companies led by co-CEOs outperformed.”

Then again, there are also downsides. This “Freakonomics” podcast debated the pluses and minuses of having co-CEOs, including viewpoints from people who have actually been a co-CEO. And it’s not hard to imagine one downside: the bureaucracy in an organization with four people who hold the reins, especially when the top two — Ellison and Catz — seem to be highly engaged in corporate dealmaking and have well-known relationships with the president of the United States. 

For what it’s worth, this isn’t even the first time Oracle has had co-CEOs. In 2014, Ellison technically stepped down as CEO after more than three decades and named Catz and HP veteran Mark Hurd as co-CEOs. It stayed that way until Hurd passed away in 2019. 

If you’re wondering how Oracle did during that time, the stock appreciated 33% over a span of about five years, lagging the 49% return in the S&P 500.