Administration January 2, 2006

Board Members Vote to Split CEO and Chairman Roles

February 1, 2006 (PLANSPONSOR.com) - Board members are increasingly advocating that the chairman and CEO roles be separated to promote a balance of power, according to a recent survey by global executive search and assessment firm Russell Reynolds Associates.
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Fifty-nine percent of board members polled advocate separating the chairman and CEO role.   Reasons cited for the separation of duties, according to a news release, were:

  • 47% believe a separate chairman provides a more effective channel for the board to express its views on management.
  • 41% want a separate chairman who can provide the CEO with guidance and feedback on his/her performance.
  • 37% believe that the chairman should focus on shareholder interests, while the CEO manages the company.
  • 36% are concerned with governance and believe that a separate chairman allows the board to more effectively fulfill its regulatory requirements.
  • 34% believe that separating the position allows the chairman to focus on the long-term strategy while the CEO focuses on short-term profitability.
  • 24% believe a separate chairman can more effectively concentrate on corporate succession plans.

On the other hand, 41% percent of board members feel the chairman/CEO position should be held by a single executive.   Respondents gave the following reasons for keeping the role combined:

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  • 58% feel that it is easier to recruit CEO candidates to a combined chairman/CEO role.
  • 46% feel that splitting the CEO’s and chairman’s role invites a power struggle.
  • 44% believe it is important for short-term and long-term strategies to be controlled by a single executive.
  • 39% believe that succession plans are clearer with only one top job.
  • 24% say that a combined CEO/chairman can better rally the board in a time of crisis.

The 2006 Russell Reynolds Associates Board Member Survey ‘Splitting Chairs’ polled 100 board members with positions ranging from chairman to non-executive independent director to non-executive chairman.

The Russell Reynolds Associates Web site is  www.russellreynolds.com .

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