More Firms Split CEO and Chairman Roles: Study

By Reuters -  |  Posted 2008-06-16 Email Print this article Print
 
 
 
 
 
 
 

Corporate governance advocates often contend that separating the chairman and CEO roles improves accountability and provides checks and balances in the boardroom. But others argue that splitting the jobs can cause confusion over who is in charge.

NEW YORK (Reuters) - More U.S. companies are splitting the roles of chairman and chief executive among different people, with corporations in the telecommunications and media industries the most likely to divide the two jobs, according to new data on Monday.

Corporate governance advocates often contend that separating the chairman and CEO roles improves accountability and provides checks and balances in the boardroom. But others argue that splitting the jobs can cause confusion over who is in charge.

Fifty-two percent of the U.S. companies tracked by GovernanceMetrics International, a corporate governance research and ratings service, had a combined chairman and CEO as of the most recently available data. That compares with 62 percent three years ago, the firm said.

"The trend is clearly heading to separate the positions," said Howard Sherman, CEO of GovernanceMetrics. "At the same time, a large number of U.S. companies are creating a lead director position, which is a way to counterbalance a combined chairman and CEO."

Not all companies are moving to split the roles. Last month, for instance, Exxon Mobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz) shareholders rejected a proposal by dissident shareholders that urged the oil company to choose an independent chairman to lead its board.

GovernanceMetrics found that among the roughly 1,750 U.S. companies in its database, utility and automotive companies were most likely to have the same person serving as both chairman and CEO.

At U.S. utilities tracked by the governance researcher, 70 percent had the same person in both jobs, while at automobile and parts companies, 67 percent had combined CEOs and chairmen.

In contrast, 30 percent of telecommunications companies had the same person holding down both the chairman and CEO jobs, while 38 percent of media companies had dual chairman and CEOs and 39 percent of technology companies also had the roles combined.

Overall, U.S. companies combine the two jobs much more often than businesses in other countries do. Separating the jobs is commonplace at British companies, where only 3 percent of companies in GovernanceMetrics' database currently have a combined chairman and CEO.

In both France and Mexico, 42 percent of companies tracked by GovernanceMetrics have the same person serving in both jobs, while in India, 25 percent of companies combine the jobs, and in Japan, 13 percent.

(Editing by Gary Hill)



 
 
 
 
 
 
 
 
 
 

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