As a result of recent corporate scandals, reformers and investors have increasingly called for U.S. companies to separate the chairman and CEO jobs — a model of corporate governance that is prevalent in the United Kingdom (as well as in most European countries, not to mention Australia, Canada and New Zealand). At first glance, splitting the two positions makes sense. After all, the same person acting as chairman and CEO looks suspiciously like the proverbial fox guarding the chicken coop. But most large U.S. public corporations continue to combine the two top jobs, generally splitting them only as a temporary measure (for example, to facilitate a CEO’s upcoming retirement).1 All of which raises the following question: Does separating the chairman and CEO jobs necessarily result in more effective leadership and better governance?
To answer that, we examined both British and U.S. boards, interviewing more than 50 directors in major public companies in the two countries.2 We found that the U.K. model is not the panacea that its advocates suggest. This is not to say that the emerging consensus that U.S. boards need independent leadership3 is wrong. In fact, it’s dead-on right. But achieving such leadership by splitting the two positions has its own characteristic problems, and this arrangement is not necessarily a clear improvement over the... To read the complete article, login or sign-up using the form below.
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