Ken Lewis that is. The Charlotte Observer reports that Lewis is out as Chairman of the Bank of America board, and Walter Massey is in. Lewis will hold on to his CEO title.Of course, there are those who argue he should resign that, too.
The result comes at the end of along day that saw a delay in the vote count, and then a recount. Exciting stuff!
There’s a groundswell of opinion saying the roles of Chairman and CEO should always be separate.
Company boards are better able to oversee management fairly and impartially if the roles of CEO and Chairman are split, the argument goes. But the majority of US publicly-traded companies have Chairmen who are also chief executives. The proportion of companies in the S&P 500 opting to split the roles has risen to 37% from 22% in 2002, according to the Wall Street Journal. But CEOs don’t like giving up the power, and argue it makes operational sense for one person to do both.
Critics say separating the chairmanship can trigger power struggles and confuse staffers, especially when outside chairmen get involved in daily operations. Most CEOs prefer to chair their boards because “they think having one boss at the helm is better than having two.”
In Europe and Canada, the posts are often held by two different people. Ira Millstein, a lawyer and much-published authority on corporate governance says an independent board is a shareholder’s best protection.
The board’s job is to pick a great CEO and then let him operate. Monitor him and fire him if he falls off the cliff, but don’t try to run the company. I don’t want boards managing the CEO. Boards need to be able to remove the CEO, to not overpay him, and to get him to focus on performance. But those are externals to the real job of a company, which is to deliver the goods–to perform. That’s the CEO’s job, not the job of the board.
Clearly most American companies don’t agree. There’s a perception that boards whose chairman is also the CEO focus less on constant watchdog evaluation of that individual than making him or her successful. A study by headhunter Christian & Timbers found US executives think CEO-chairman might be able to withstand pressure better, especially when short-term changes don’t pay off, than non-CEO chairman. Finally, “A CEO who is not a chairman is the board’s hired hand; a chief who is also chairman has far more influence over other directors,” executives noted.
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