Urges Corporate Boards to Prepare for ‘Next Generation’ Leadership by Splitting Chair and CEO Roles on Leadership Succession
NEW HAVEN, CT – The Chairmen’s Forum, a group of prominent current and former chairs of corporate boards from the United States and Canada, yesterday issued the following model statement regarding the separation of Chair and Chief Executive roles and urged corporate boards to adopt this language into the governance policies of the corporations for which they have oversight:
“The Board believes that having a separate, independent director to serve as Chair of the Board assists the Board by providing clear, independent Board leadership. Therefore, it is expected that the Board will be chaired by an independent director. This principle will guide the Board’s approach to succession planning and succession decisions. If the Board determines that special circumstances require the roles of Chair and Chief Executive Officer to be combined, the independent directors of the Board shall designate a Lead Independent Director who shall serve in such capacity until such time as a new independent Chair is appointed. In this event, the Board shall provide an explanation of its decision to shareholders.”
Bill McCracken, chief executive of CA Technologies and chairman of the Chairmen’s Forum, said, “Today, a record 41% of S&P 500 companies feature separate chairs, demonstrating that the combined chairman and CEO is no longer common practice in the US, and 21% of Boards have an independent Chair with no current or former executive role at the company, compared with just 10% five years ago, according to search firm Spencer Stuart. Corporate directors should prepare now for next-generation leadership, which involves building companies through strong and constructive boards led by independent chairs.”
“The Chairmen’s Forum sees succession as the inflection point in moving to a fresh model of board leadership. This policy language offers a clear way for directors to put this fresh model into practice and reflects an emerging standard,” McCracken continued.
While the Chairmen’s Forum has long supported independent chairmanship, the group at its December meeting adopted the model policy recommendation under which the chair and CEO roles would be split by default upon a leadership succession. The Chairmen’s Forum will promote the measure as a priority for 2012.
For further information visit: http://millstein.som.yale.edu/networks/chairmansforum.
About the Chairmen’s Forum
Founded on February 26, 2008, the Chairmen’s Forum is an organization comprised of current and former chairs of corporate boards whose companies are incorporated and stocks are traded on exchanges in the United States and Canada. Participants—who have numbered about 50—meet twice a year for the purpose of addressing steps that enhance the accountability of corporations to owners, discussing matters of common interest, promoting deeper understanding of independent board leadership practices and reaching out to the wider market on effective practices of board chairmanship. The Chairmen’s Forum intends to help create an international hub of national and regional forums of non-executive chairs to encourage peer exchanges worldwide.
William McCracken, CEO of CA Technologies, is current chair. The Forum was founded by the Yale School of Management’s Millstein Center for Corporate Governance and Performance but is independent of the Center, which still helps advise on research.
About the Millstein Center
The Millstein Center for Corporate Governance and Performance at the Yale School of Management is a leading global resource for testing, challenging and advancing the premise that corporations should and can serve society. The Center pursues its mission by convening events; sponsoring empirical research; generating policy briefings; building market capacity by developing training, databases and institutions; and teaching and student interaction.