September was a target-rich month for corporate governance steps and missteps.
There was the special vote at Bank of America on whether the board was within its rights to recombine the positions of chairman and CEO. There was CEO health issues at SAP, BMW, and Goldman Sachs. There is the unfolding boardroom scandals at Toshiba and Volkswagen, the former over accounting irregularities and the latter involving the circumventing of emissions standards on its diesel cars in the U.S. And then there was the usual run of news about activist investors, CEO pay, SEC actions, et al.
Seeing as all the main events involved the role of the CEO — the scandals at Toshiba and VW forcing the resignation of both company's CEOs — we selected two editorial pieces for this month's e-Briefing that address CEO succession.
The Article of the Month gives us a chance to spotlight for our digital audience our selection of Governance Book of the Year for 2014: “Boards That Excel: Candid Insights and Practical Advice for Directors” by B. Joseph White. The excerpt from the book that we pulled out for this special recognition is Prof. White's advisory on getting the CEO selection decision right.
For the Columnist entry we turned to our close colleagues at Heidrick & Struggles for their guidance on “Taking the Emergency Out of CEO Emergency Succession.” Their advisory is quite a timely tie-in with what happened last month in a public way at VW and is happening in a quieter way in many boardrooms across the corporate world.
As far as the vote at Bank of America, what the majority of shareholders did was assent to the board's decision last year to give the chairman's position to CEO Brian Moynihan and agreed to let him keep both roles. I would have voted in favor, too. My vote would have been based on the notion that a board has the duty to make such a leadership decision when, in its considered judgment, it is the right decision for the corporation in its present state and for its future.
I acknowledge the advantages of separating the chairman and CEO roles, and close readers of Directors & Boards know that we have published a number of articles that advance the argument for separating the roles. See “The Great Divide” (First Quarter 2010) as a representative example of how we have explored in depth the pros and cons of separating the chairman and CEO positions.
In fact, a warning made in that article by James Robinson is worthy of citing in light of the Bank of America vote: “Beware the simplicity of saying that two heads are better than one.”
As always, I welcome your comments at jkristie@directorsandboards.com.