When a crisis at Boeing Co. escalated into calls for replacing Chief Executive Dennis Muilenburg, the jet maker’s board did the next closest thing: stripped him of his role as chairman.
When AT&T Inc. reached a cease-fire last week with activist investor Elliott Management Corp., the company disclosed it planned to separate the roles of chairman and CEO when current leader Randall Stephenson retires.
And, according to The Wall Street Journal, when Wells Fargo recently hired Charles Scharf as CEO to restore the bank’s battered reputation after a fake-account scandal, it kept the board’s independent chairwoman in her role.
The number of big U.S. companies separating the top roles is at record levels. It is a structure that has long been supported by pension funds and governance advocates. But the latest moves inside some of America’s biggest boardrooms occurred only after a crisis or shareholder pressure forced the change.
“If you haven’t done it already, it’s low-hanging fruit to appease the shareholders,” says Rosanna Landis-Weaver, a program manager at As You Sow, a nonprofit investor advocacy group.
The separation is intended to maximize management accountability and the independence of the board. Traditionally, the CEO oversees the daily operations of the company as the top manager, while the chairman heads the board, which oversees management. Combining both jobs concentrates power by essentially making the CEO their own boss. Read the full story.
