Considering a Split Between the Board and CEO

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					 Boards & Shareholders

Considering a Split Between the Board and CEO
By Jaclyn Jaeger                                 the company. On the legislative front,                      Chairman and CEO Jay Brown to split
                                                 Sen. Charles Schumer has also introduced                    his jobs.

W      hether the pressure comes from
       shareholders, new rules or legisla-
tive reform, the contentious question of
                                                 a bill with language that would split the
                                                 CEO and chairman roles.
                                                    The pressure to split leadership roles
                                                                                                                MBIA is a “unique” example, Alogna
                                                                                                             said, because Brown believed that sepa-
                                                                                                             rating the roles voluntarily—so the CEO
splitting the CEO and board chairman             is already taking effect: only 53 percent                   could focus more on management, while
roles is likely to become a reality for U.S.     of the S&P 1500 companies now keep a                        the chairman could focus more on roles
companies sooner or later.                       combined CEO-chairman, compared to                          of the board—would help the business.
   But preparing for such a shift in lead-       70 percent in 2003.
ership requires an equally important shift          Many companies already have “argu-                       Culture Development
in corporate culture, which most compa-
nies aren’t prepared for, experts say.
   With the current economic crisis in
                                                 ably been influenced by the current envi-
                                                 ronment,” Alogna said. In August, for ex-
                                                 ample, AIG split the roles of its chairman
                                                                                                             D     avis and Alogna warned that the
                                                                                                                   drive to split top leadership will
                                                                                                             require adjustments to a company’s cul-
particular, companies are facing a “very         and CEO. Bank of America shareholders                       ture, as the workforce sorts out life under
significant tipping point,” Stephen Alo-         approved a resolution to split the roles in                 an independent chairman. Davis recom-
gna, a senior manager for Deloitte, said         April, as did shareholders at Office De-                    mended directors join organizations like
during a Sept. 2 Webcast on independent          pot. And in May, the board of MBIA ac-                      the Chairmen’s Forum to understand
leadership. Investors today have more            cepted a recommendation from current
means than ever to influence companies                                                                                              Continued on Page 69
and boards, and “We’re going to see more
of that happening in the next couple of                  WHO’S THE BOSS?
years,” he said.
   In addition, while the push to split the        Prevalence of board leadership structures at S&P 1500 companies as of Aug. 1, 2009:
CEO-chairman roles is not new, corpo-
rate boards will likely feel “a big jolt” next      Status                                                                          Percentage
year when shareholders gain some sort of
                                                    Chairman and CEO are combined                                                      53.6%
ability to place director nominations in
the corporate proxy statement, according            Chairman is an independent outsider                                                21.1%
to Stephen Davis, director of Yale Uni-             Chairman and CEO are separated but chairman is an insider/employee or an
versity’s Millstein Center for Corporate                                                                                               22.7%
                                                    affiliated outsider
Governance (and a regular Compliance
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