The Board Blog: Mandating Split CEO/Chairman Roles – Part II
Posted October 13, 2009 8:11:11
First, I want to thank all of you who took the time to comment on the previous blog, by writing, calling, or approaching me at our Annual Boardroom Summit in NYC. Obviously, this is a much-debated issue and your feedback was very interesting and appreciated. In light of that, I felt compelled not to abandon this topic yet, since there were several folks that might have misunderstood my position.
The title of the last blog was “Will Mandating an Outside Chairman Solve Anything?” My comments were mainly directed toward the issue of mandating this decision, as well as the important point that title changes alone won’t provide the moxie a board needs to properly perform its duties.
What I perhaps wasn’t clear on is that I don’t oppose splitting the titles—and in fact, I support the separating of the positions when the opportunity presents itself and when there is at least majority agreement among the board members that it will be a positive move for the company. That’s not to say it’s the right decision for all companies, but I do believe in the long run that the presence of a outside independent chairman who doesn’t abuse the position (i.e., no company headquarters office or permanent staff) will provide a better corporate governance environment in which the company can be successful. However, as stated in the previous blog, if you think it is the short-term answer to a board’s problems, then you’re just kidding yourself.
In the course of doing research for statistical or bottom-line evidence that would support either side of this argument (you may recall none was found), I did come across an “educational campaign” organized by the Yale Millstein Center made up of over 50 corporate leaders, investors, and governance specialists whose charge it is to urge companies to bolster board oversight of management by splitting the roles in today’s corporations. It is called the “Chairmen’s Forum” and is headed by the retired vice chairman of General Motors, Harry Pearce, who currently chairs the boards of Nortel Networks and MDU Resources. There are several former CEOs like Harry Golub (American Express) and Stephen Wolf (UAL Corp.) who would be interesting to hear from on this issue, knowing their experiences on both sides of the table. My plan is to reach out to Harry Pearce or the Chairmen’s Forum and invite them to comment on splitting the roles in this blog. Like my experience of being in both roles, I value their opinions, and all interested parties should listen to why their experiences have led them to feel so strongly about this issue.
The reality is that corporations will continue to move toward splitting the roles, so no matter how you feel about it, it won’t be long before 90% of the Fortune 500 companies will have separate CEOs and chairpersons, even if it isn’t legislated or regulated. So don’t fight too hard for the right to choose whether the title will be lead director or chairperson, because there are more important issues pending and on the horizon. Like, say… proxy access and the election of directors for one!
And last, for anyone who was looking for the answers to the questions that Harvey Pitt and Mike Halloran didn’t have time to address at the Annual Boardroom Summit last week, I want to report that we hope to post some of their responses in the next Board Blog. And by the way, if you missed their session at Corporate Board Member’s Boardroom Summit in NYC, you missed one of the best panels we have ever heard on regulatory issues that affect the boardroom. Thanks Mike and Harvey for a great show.