The First Quarter edition of Directors & Boards has come off press today. Our lead story is a debate on the wisdom of separating the chair and CEO positions. Our commentators are a panel of business leaders assembled at the Weinberg Center for Corporate Governance at the University of Delaware. Under the deft moderating by the center's director, Charles Elson, the group was tasked to think through the many critical dimensions — from governing theory to practical applications — of splitting these two top leadership roles.
Charles and I did not decide willy-nilly on this topic. This is a vastly important subject that is transcending the normal debate over governance best practices. Capitol Hill pols are eyeing this structure of board leadership — legislation that would separate the roles has been introduced in Congress — and, as Prof. Elson warns in the article, a mandated separation "is an issue that the courts ultimately may deal with as well." So we assembled a superb group of thinkers to tackle the pros and cons while this issue is still on the cusp of decisive action. I commend the article to you as a distinctive examination of board leadership.
Here is a taste of the flow of the debate. We'll first turn to James D. Robinson III, and then in the posting on March 5 to follow I will highlight a comment by Colgate-Palmolive's retired chairman and CEO, Reuben Mark.
Robinson was chairman and CEO of American Express Co. from 1977 to 1993. He has been general partner of venture capital firm RRE Ventures since 1994 and also president of JD Robinson Inc., a strategic advisory firm. He is presiding director of the Coca-Cola Co. board, and from June 2005 until February 2008 he was nonexecutive chairman of Bristol-Myers Squibb Co. A superb background to make this statement:
"I have been an independent director. I have been a nonindependent director. I've been a chairman and CEO. I've been a nonexecutive chairman. There are times when the best course of action is to split the roles. There are times when it's best to combine them. My conclusion is a simple one: Do no harm.
"Beware the simplicity of saying that two heads are better than one. What about the 12 heads of the full board? You have to be careful that you don't create a passive attitude among directors who think they can just sit back and watch while the chairman and the CEO run the show. You want all board members to be actively engaged. Once you start separating the duties and acknowledging that two heads are running the shop, you risk disenfranchising the other board members and not getting the active contribution you want from each and every director."
Beware the simplicity of saying two heads are better than one. That's an important insight to carry forward as this separation debate heats up.