Where CEOs live becomes source of debate as companies tighten in-office policies

Return to office mandates are on the rise, leading many people to ask: What about the CEO?

Starbucks, for example, ended its remote work policy for corporate headquarters staff in 2023. But the Seattle company was skewered last year when it granted its new CEO a remote work arrangement.

With the corporate zeitgeist shifting toward in-office quotas, the debate is spilling into chat boards and in private conversations.

Minnesota’s business luminaries are split on the debate.

“I just think there is no substitute for that engagement, that personal engagement,” said Bill George, a former Medtronic CEO who taught executive leadership at Harvard University for 20 years.

“I think the idea of the aloof CEO is really dead.”

For CEOs of large, multinational companies, however, Myles Shaver is not convinced it matters.

“The CEO’s job is to oversee the entire enterprise,” said Shaver, a professor at University of Minnesota’s Carlson School of Management who wrote a book on Minnesota’s headquarters economy.

These executives are often on the road, visiting offices and plants around the world, investor and industry conferences and large customers.

“In that case, it doesn’t really matter where the CEO lives,” Shaver said.

A new study out this year, though, shows companies with long-distance CEOs have lower market valuations and employee satisfaction rates. Such leaders are also more likely to leave under investor pressure because of the company’s financial performance, according to the study of 929 U.S. companies by Boston College and Arizona State University professors.

About 18% of the companies studied by the researchers had so-called fly-in CEOs between 2010 and 2019. A heavier concentration of those were businesses based in colder, landlocked central U.S. states.

Minnesota would fit that geographic profile yet had one of the lowest rates of out-of-town CEOs during that time — much lower than neighboring states Wisconsin, Iowa and North Dakota.

There are, however, long-distance CEOs among the ranks of Minnesota’s 17 Fortune 500 companies.

Minnesota was not the primary residence of UnitedHealth Group’s recently retired CEO Andrew Witty, according to compensation perks disclosed in the health care company’s annual proxy report. Witty resigned from UnitedHealth in May, the same day the company pulled its forecast for the year, sending the share price tumbling.

Brian Cornell, Target’s chief executive for more than a decade, is registered to vote in Florida. Voter registration was a factor used to identify long-distance CEOs by the study.

George, the former Medtronic CEO who also served on Target’s board in the 1990s and early 2000s, noticed when his neighbor, Cornell, sold his home about four years ago. (Cornell subsequently did buy another Twin Cities residence, Target said.)

Target has produced top-notch performance for much of Cornell’s tenure, George said.

But over the past few years, the retailer has struggled with uneven same-store sales while its competitors, such as Walmart, have gained ground.

Long-distance CEOs may spend considerable time in headquarters cities, but it’s the daily interactions, George said, that make a difference — the same argument used as return-to-office proponents.

“CEOs need to be in the office physically meeting with people,” he said.

It’s easier to recruit top executives when companies give them a choice in living arrangements, the Boston College/Arizona State study found, but when a CEO does move to the headquarters city, the company does better.

“When a CEO ends a remote arrangement and moves to the headquarters, the firm’s operating performance improves,” the authors wrote. “Conversely, after a CEO relocates away from the headquarters, the firm’s performance declines.”

Minneapolis-based Sleep Number recruited Linda Findley, the former president and CEO of New York-based Blue Apron Holdings, to lead the company in April. Her contract said she plans to move here and she was given a $200,000 relocation expense package as well as six months’ worth of temporary living and commuting expenses.

Two years ago, Bryan Hanson was hired as group president and CEO of 3M’s health care business, which was spun off as Solventum six months later. His employment contract allows him to work remotely from his home in Fort Lauderdale, Fla.

Solventum has since selected Eagan for its permanent headquarters. The company declined to comment and no changes to that provision have since been noted in public filings.

3M’s new CEO Bill Brown took the helm in May 2024 and has since moved to the Twin Cities.

“It’s been my practice to work in the office except when I’m traveling on business, and to be as visible as possible with employees when I’m in the office,” Brown wrote in an email to 3M employees announcing plans to sunset the company’s hybrid work policy.

In the 1980s and 1990s, companies distanced CEOs from rank-and-file workers with private elevators, separate dining rooms and other physical barriers.

The pendulum swung as data revealed executive engagement with employees drove performance.

George estimates he traveled 30% of the time at Medtronic. When he was in the office, meetings were more ad-hoc and addressed emerging issues — from acquisitions to new products to customer feedback — which was invaluable for productivity, he said.

There’s evidence remote work has a more negative effect for people whose jobs involve critical analysis and managerial decisions.

“Our findings suggest that such arrangements introduce frictions into managerial decisions more often than they yield efficiency gains,” the study’s authors, Ran Duchin and Denis Sosyura, wrote in their report.

“While remote working relationships have become technologically feasible, [they have] unintended effects on managerial performance and incentives,” they said.

Employee performance reviews of the long-distance CEOs found them more likely to focus on short-term performance. They also were graded as less informed about day-to-day operations and generally absent.

C.H. Robinson CEO Dave Bozeman had a choice whether to move to the Twin Cities from Detroit when he took over as chief executive of the logistics firm in 2023. His family chose to move to Minnesota.

“If I’m going to go in there and do the things that I like to do — that’s improving companies, driving performance, developing people, and really going up and to the right ... I can’t do that remotely,“ Bozeman told the Star Tribune last year. ”I have to be where the headquarters are.”

He and his wife have both become involved in local nonprofits and earlier this year, he joined the 3M board of directors.

It’s been a tough few years for logistics providers, which have had high volatility, including historic supply chain disruptions and President Donald Trump’s tariffs on foreign trade.

Under Bozeman’s leadership, the company has held its own. In the first quarter, revenue slipped 1% but profits rose more than 40%.

And then there’s Ameriprise, which defies the study’s finding.

The CEO of one of Minnesota’s best-performing public companies lives in New Jersey.

James Cracchiolo also is consistently one of the state’s highest-paid chief executives. The company recently announced plans to increase its in-office mandate from three to four days a week on Sept. 2.

Ameriprise has key executives elsewhere, but the Minneapolis headquarters has more than 4,000 employees on campus making it the fifth-largest employer downtown, according to the Minneapolis Downtown Council.

Cracchiolo has been CEO of Ameriprise since its spin-off from American Express in September 2005. Since then, it has been one of the best performing financial services companies in the S&P 500 with its stock delivering a total return of over 2,000%, more than three times better than the market index overall.

Ultimately, Shaver said, a CEO’s success hinges on his or her ability to manage the company’s challenges — wherever they may live.

Star Tribune staff writers Christopher Snowbeck, Carson Hartzog and Brooks Johnson contributed to this report.