Friday, March 5, 2010

The 'Great Divide' II: It Is Inevitable

Here is round 2 of the debate on separating the chair-CEO roles, as explored in an eight-page cover story in the Directors & Boards First Quarter edition just off press.

The first shot highlighted in this blog came from former American Express Chairman and CEO James Robinson, in the posting of March 4th below. Now we turn to panel member Reuben Mark, who retired from Colgate-Palmolive Co. at the end of 2008 after having served as chairman of the board for 22 years and CEO for 23 years. His outside directorships have included Cabela's Inc., Citigroup Inc., the New York Stock Exchange Inc., Pearson PLC, and Time Warner Inc. Listen to what his long tenure of holding down both the chair and CEO positions has led him to conclude:

"Now having stepped down from both positions I have become convinced that separation is required. During the last three or four years of my tenure as chairman-CEO, I was devoting an increasing amount of my time to board management — eliciting directors' opinions, bringing them together on issues, and so on — and less time perforce on the CEO job. The president ended up absorbing more of my CEO duties. It became clearer and clearer that being chairman was virtually a full-time job.

"Also, let me acknowledge this. People who serve as CEOs, and I certainly include myself among them, tend to have a touch of megalomania or a leaning toward tyrannical action. After all, a corporation is a kind of benevolent dictatorship. If there is a separation, and assuming good faith and assuming the right people are in place, the board has an additional conduit of information and oversight that they would not have had. So even though my personal experience is contrary to this conclusion, I believe that separation of the roles not only should happen but inevitably will happen."

When one of the nation's most respected business leaders has convinced himself that there is a new and better way of running a corporation and its board, attention must be paid. A recommendation like this can kick the "great divide" debate into a higher gear.

Reuben Mark, in white shirt, is pictured above at the Weinberg Center on Corporate Governance at the University of Delaware, where the debate was held in November 2009; also in photo are (l. to r.) shareholder activist Bob Monks, HealthSouth Corp. Nonexecutive Chairman Jon Hanson, and Charles Elson (standing), the center's director who moderated the panel discussion.