This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

CEO, Chairman Positions Should Be Split

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) - Policy makers, regulators and investors alike recognize that board independence is critical to good corporate governance. How best to achieve it is still a matter of some dispute.

One of the most hotly contested issues in the debate is whether a company should vest both the board chairman and CEO titles in the same person, historically the rule in the U.S. This issue was brought into sharp relief by the financial crisis of 2008, when many drew a causal link between corporate failure and the dual chair/CEO role, but the debate is not new.

Those who favor the dual CEO/chair role claim that that the positions are so interdependent that splitting them can be a significant distraction. Advocates of separating the role argue that, when there is a single individual in control of a company, adequate independent checks on management and concomitant shareholder protections are inherently lacking.

Follow TheStreet on Twitter and become a fan on Facebook.

What may be new post-crisis is that investors are more active in pushing companies to split the two roles. Commentators have described the 2009 proxy proposal that stripped then Bank of America CEO, Ken Lewis, of his chairmanship as a " bellwether event," emboldening shareholders to force the issue. News Corp. and Research in Motion are two recent examples of companies on the receiving end of similar demands, while other companies like Deere and Total are reportedly facing the same pressure.

Even so, statistics reported by executive search firm Spencer Stuart in 2010 indicated that most U.S. companies -- 60% -- continue to combine the chair/CEO role. Among the 40% that split the roles, only 19% stated that their chairman is independent, and only six companies confirmed that they had an explicit policy to separate the roles.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.70 -3.20%
FB $116.77 7.20%
GOOG $691.61 -2.00%
TSLA $248.71 -1.10%
YHOO $36.66 -0.78%


Chart of I:DJI
DOW 17,820.48 -221.07 -1.23%
S&P 500 2,075.31 -19.84 -0.95%
NASDAQ 4,808.5970 -54.5440 -1.12%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs