When Hy-Vee revealed earlier this month that it plans to divide top-level management responsibilities among two newly appointed CEOs later this year, the company said it decided to try that leadership approach because it has evolved into too complex an organization to continue concentrating executive power in a single person.
The Aug. 16 announcement represented an abrupt shift from the course Hy-Vee set out just weeks before, when the retailer said veteran company executive Aaron Wiese would solely take over the CEO’s role from longtime Chairman and CEO Randy Edeker, who has served in his role since 2012.
Instead, Wiese and Jeremy Gosch, another executive with deep experience at Hy-Vee, will both hold the title of CEO, with Wiese overseeing the company’s subsidiaries and supply chain and Gosch leading its retail operations. Wiese and Gosch will both also have the position of vice chairman of the board, while Edeker will remain as chairman.
“We have become more than just a grocer. With our focus on health and wellness, pharmacy, restaurants, grocery, distribution and digital assets, it’s time we evolved our leadership structure to best position the business for the future, which is why Jeremy will also serve as a CEO for the company,” Edeker said in a statement.
A Hy-Vee spokesperson emphasized that Wiese and Gosch will hold separate positions following their promotions, both which are set to take effect Oct. 1. “[T]hese are not going to operate as co-CEO roles. They will each be CEO over separate components of the business and will each make decisions for their specific areas,” the spokesperson said in an email.
“You don't just appoint the CEO, and then all of a sudden change your mind and appoint somebody else” to share power unless something unexpected took place inside the company. “I mean, let's just face it — if I was a CEO, I would probably want to be the only CEO.”
Assistant professor, Case Western Reserve University School of Law
Hy-Vee’s sudden addition of a second CEO raises questions about what’s going on behind the scenes at the company, said Anat Alon-Beck, an assistant professor at the Case Western Reserve University School of Law who focuses on corporate law and governance.
“You don't just appoint the CEO, and then all of a sudden change your mind and appoint somebody else” to share power unless something unexpected took place inside the company, said Alon-Beck. “I mean, let's just face it — if I was a CEO, I would probably want to be the only CEO.”
In a statement provided to the Des Moines Register in August, Hy-Vee said it decided to make the announcements about the promotions separately because “we wanted each leader to have their own moment of recognition."
Alon-Beck said that while it is uncommon for a large U.S. company to have two CEOs, separating the chief executive’s role into two co-equal positions comes with potential advantages for Hy-Vee. In particular, she said, it allows the company to tap a deeper well of expertise while preventing one person from having too much influence over its overall direction.
Alon-Beck added that Hy-Vee’s decision to break with its long tradition of combining the positions of board chair and chief executive, meanwhile, is in keeping with a trend in corporate America that has been unfolding for more than a decade of moving away from a single person holding both of those posts.
“I do think there should be separation so that we will have checks and balances” in a company’s C-suite, Alon-Beck said. “Once you split up the CEO position, then you're curtailing the power of the CEO even more so they're not going to have this unlimited power to oversee everything.”
Alon-Beck said a company’s decision to assign day-to-day management responsibilities to more than one CEO sometimes can suggest it is dealing with headwinds and has concluded the best way to overcome them is to divide authority.
Hy-Vee did not refer to challenges that might have spurred its decisions to promote Wiese and Gosch or make the announcements separately, and it did not make either executive or Edeker available for an interview.
The company disclosed earlier this year that it was taking actions to deal with difficult conditions. Those measures included encouraging hundreds of corporate employees to shift to store-level roles and putting several construction projects on hold.
“As prices rise across the country, our top priority has to be centered on fighting to get the best deals possible for our customers,” Gosch, who currently serves as Hy-Vee’s president and chief operating officer, wrote in an April advertorial in the Des Moines Register. “In order to do that, we must find other ways to cut expenses.”
Andrew Apfelberg, a corporate and M&A attorney at the law firm of Greenberg Glusker, said a company’s decision to appoint two CEOs can simply reflect an effort to avoid losing an experienced executive who might have been expecting to get the top job and is unhappy at having been passed over.
“You don't want to lose loyal people. So you still need to provide a path or a trajectory for growth, whether it's financial growth, title growth, scope of responsibility growth,” said Apfelberg. As long as two executives avoid competing with each other and are comfortable sharing power and making compromises, giving both of them the title of CEO can work out for a company, he said, comparing the arrangement to a marriage.
Apfelberg pointed out that in situations where two CEOs serve under a single chairman — as at any company — the board of directors has the ability to settle differences of opinion over high-level strategic decisions.
“Ideally, you're picking people who work well together and have similar visions to reduce the chances of that happening, but I think that if that were to occur, it would go to the board and the board would ultimately pick one one of you or the other,” Apfelberg said.
Catherine Douglas Moran contributed reporting to this story.