Chair and CEO: To Split or not to Split?

This so-called best practice isn’t yet universal.     In September, insurance giant AIG became the latest high-profile corporation to bestow the additional title of chairman on its CEO, Peter Zaffino.    “The AIG board of directors has great confidence in Peter’s ability to continue executing on AIG’s transformation and growth strategy designed to create long-term, sustainable value,” the board’s then-nonexecutive chairman, Douglas Steenland, said in a statement.   Microsoft combined the chair and CEO roles in June for Satya Nadella. Companies like Berkshire Hathaway, AmerisourceBergen and ExxonMobil all have CEOs who serve a dual role   But even so, splitting the jobs is widely considered a best practice by corporate governance experts.   “In order to monitor effectively, the board should control its own agenda and its own meetings,” says Charles Elson, Directors & Boards’ executive editor-at-large, a director of Encompass Health and the Edgar S. Woolard Jr. Chair in Corporate Governance at the University of Delaware.    In general, boards have moved toward having one person serve as CEO and another as chair. Only 33 companies in the S&P 500 index have combined the CEO and chair roles over the last five years, compared with 100 that have split the posts, according to ISS Corporate Solutions. Nearly 60% of all S&P companies today split the role of chair and CEO, compared with just 37% a decade ago.   John Dionne, a director of Clear Channel Internatio...

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