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The Relationship Between a CEOs House Size and Company Performance

Wednesday, April 25, 2007
l7XH0`*|.IaBP$Z The Relationship Between a CEOs House Size and Company Performance Lke1o i8M5E#w&T$o

7T0w'L6uL5]k I have the pleasure of knowing a former (and very successful) CEO of a well-known company who will occasionally share his wisdom with me. Some of my favorite business one-liners from him include "Do something, even if it's wrong" or "The only thing you know for certain about any five year sales forecast is it's going to be wrong". The former speaks to his distaste for complacency, something way too many marketing departments are guilty of. The later speaks to the futility in trying to forecast sales beyond a year or two and the risks of putting too much weight on long-range forecasts.hY:VY@,Wse\l

%j[:JcZ,]/CI8U_N Anyway, I had to laugh (and think of my friend) when I read an article about research that showed the bigger the CEO home, the worse the company's stock fares.
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P$xh o+vp I remember a story my CEO friend once told me about a visit he made to one of his subsidiary's whereby the local company president, in an effort to impress the visiting CEO, reserved a luxury room at a high-end hotel, stocked the bar, arranged for a stretch limousine, etc. The CEO (always aware that his actions - personally and professionally - were a reflection on the company) scolded the actions of the subsidiary president saying it was a waste of company money and sent a bad message to employees.
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Y8J"K(p/G})h*o While this CEO house size research is humorous and should not be taken very seriously, it is interesting. A certain kind of person buys a home that exceeds 10,000 square feet - probably the same type of person who would have expected and appreciated the subsidiary president’s actions in the above story. And according to this research, they don't make a very good CEO.6`JW6C7p8fO
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Here are some examples from the research::^s D#Yz'\3m/l
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Former Home Depot CEO Robert Nardelli's nearly 30,000 square-foot mansion was among the largest in the study.;v7H~Pc h
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Power-One Inc.'s former CEO bought a 12,000 square-foot home in Malibu for $15 million (selling more than 3 million shares before that purchase for a total market value of more than $100 million). The year the house was bought the company's stock was at an all-time high of $90. Today, it is around $4.
!q'F$N0R?y,C]9e0W Make of it what you will but before I invest I just may ask the house size question. In fact, maybe house size should be a required company disclosure.