Young CEOs offer risks and rewards

Facebook founder and CEO Mark Zuckerberg who, at age 27, will be the youngest CEO of a Fortune 1000 company when Facebook goes public.

Among the more thrilling parts of Facebook’s impending initial public offering has been the wealth of details offered up in the social networking site’s prospectus document, which included the divulging of a number of risks the company could face as it continues to grow.

But one of the possible risks Facebook didn’t mention is the age of CEO Mark Zuckerberg, who, at 27 years old, will be the youngest chief executive at a Fortune 1000 company when Facebook goes public. A story in Tuesday’s Wall Street Journal examined the relative risks and rewards for companies headed up by young CEOs like Zuckerberg, and noted that there were only four CEOs under the age of 40 who were at the helm of S&P 500 companies between the years of 2004 and 2008.

The average age of incoming CEOs at S&P 500 companies has been on the decline — it was 52.9 in 2010, down from 54.7 in 2006, according to the WSJ. And technology and Internet companies have certainly played a large role in lowering that average age. In 2011, for example, real estate website Zillow went public while headed up by Spencer Rascoff, who was 35, and so did discounts website Groupon,  led by Andrew Mason, who was 30. Eight of the 42 U.S. tech companies that went public in 2011 were led by CEOs who were younger than 40, according to the newspaper.

Some companies with young CEOs have gone on to reach storied heights of success, like Google, which is headed up by 38-year-old Larry Page, the story noted.

But management theorists like Vivek Wadhwa have found that young CEOs may contribute to poor returns in the venture industry. He studied more than 500 technology and engineering companies with sales more than $1 million, and found that “age provides a distinct advantage,” according to the WSJ. Among the most successful companies, the average age of CEOs was 39, and twice as many companies were founded by someone older than 50 years old than there were companies founded by someone younger than 25, according to the story.

Higher-ups at Facebook would tend to disagree, however. James W. Breyer, a director of Facebook, told The Journal that “skills, passion, intense curiosity and extremely high IQ are more important.”