Chairman-CEO Split Gains Allies - WSJ.com

Chairman-CEO Split Gains Allies - WSJ.com

Wall Street Jounal
THEORY & PRACTICE
MARCH 30, 2009
Chairman-CEO Split Gains Allies
Corporate Leaders Push for Firms to Improve Oversight by Separating Roles
By Joann S. Lublin

Excerpts:

The effort to separate the roles of chairman and chief executive at U.S. public companies is gaining prominent new allies. More than 50 corporate leaders, investors and governance specialists Monday will urge companies to bolster board oversight of management by splitting the roles.

Participants include MBIA Inc. CEO Jay Brown, former American Express Co. head Harvey Golub, KB Home co-founder Eli Broad and former UAL Corp. CEO Stephen M. Wolf, as well as representatives of big pension funds.

Businesses with separate chairmen "would perform better overall -- and not just in shareholder returns," contends Harry Pearce, a retired General Motors Corp. vice chairman who is chairman of MDU Resources Group Inc. and Nortel Networks Corp. Mr. Pearce heads the Chairmen's Forum, a group of independent board chairmen that helped organize the new campaign.

In a report prepared by the Millstein Center for Corporate Governance and Performance at Yale University's School of Management, the Chairmen's Forum proposes that companies appoint a separate chairman after an incumbent CEO-chairman leaves -- or explain why not to shareholders. The group is considering asking the New York Stock Exchange and Nasdaq to adopt listing rules that would require separate chairmen.

More U.S. companies are dividing the roles, but the trend is spreading slowly because many CEOs resist sharing power. About 37% of companies in the Standard & Poor's 500-stock index have separate chairmen and CEOs, up from 22% in 2002, according to the Corporate Library, a research firm in Portland, Maine.


Read Full Article: http://online.wsj.com/article/SB123816562313557465.html

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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.