Should the CEO be the chairman?

MIT Sloan Management Review

Volumn 46, Issue 2, 2005, Pages 71-74

  Lorsch, Jay W ^a   Zelleke, Andy ^b  

^a HARVARD BUSINESS SCHOOL   (United States)

^b UNIVERSITY OF PENNSYLVANIA   (United States)

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EID: 13444309603     PISSN: 7653697     EISSN: 1782155X     Source Type: Journal    
DOI: None     Document Type: Review

References (10)

1. According to a March 2004 study, 75% of the CEOs of S&P 500 companies are also the board's chairman, down slightly from 79% as of February 2003. Of the S&P 500 companies that did not combine the two jobs in March 2004, at 65 of those organizations the chairman was the company's former CEO. See "Governance Research From the Corporate Library - Split CEO/Chairman Roles - March, 2004," www.thecorporatelibrary.com/Governance-Research/spotlight-topics/spotlight/ boardsanddirectors/SplitChairs2004.html.
2. These directors included 18 chairmen (holding a total of 24 chair positions among them) and five CEOs of the 100 largest British companies, as well as 17 former or current Fortune 500 CEO/chairmen.
3. See M. Lipton and J. Lorsch, "A Modest Proposal for Improved Corporate Governance," The Business Lawyer 48, no. 1 (1992): 59-77.
4. This article draws extensively from A. Zelleke, "Freedom and Constraint: The Design of Governance and Leadership Structures in British and American Firms" (Ph.D. diss., Harvard University, 2003).
5. D. Higgs, "Review of the Role and Effectiveness of Non-Executive Directors" (London: Department of Trade and Industry, 2003).
6. The British prefer the term nonexecutive director to refer to board members who are not part of management (called outside directors in the United States). British nonexecutive directors make up less than 60% of the board of the typical Financial Times Stock Exchange (FTSE) 100 company (that is, the top 100 British companies ranked by market capitalization); the other directors are high-ranking executives of the company. In contrast, fully 80% of Fortune 100 board members are outside directors.
7. Higgs, "Review of the Role and Effectiveness of Non-Executive Directors."
8. Sarbanes-Oxley Act of 2002, Public Law 107-204, 107th Congress, enacted July 30, 2002, http://news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf.
9. See New York Stock Exchange, "Final NYSE Corporate Governance Rules," approved by the Securities and Exchange Commission on Nov. 4, 2003, available at http://www.nyse.com/pdfs/finalcorpgovrules.pdf; and NASDAQ, "NASDAQ Corporate Governance Summary of Rules Changes," approved by the SEC on Nov. 4, 2003, www.nasdaq.com/about/CorpGovSummary.pdf.
10. See New York Stock Exchange, "Final NYSE Corporate Governance Rules," approved by the Securities and Exchange Commission on Nov. 4, 2003, available at http://www.nyse.com/pdfs/finalcorpgovrules.pdf; and NASDAQ, "NASDAQ Corporate Governance Summary of Rules Changes," approved by the SEC on Nov. 4, 2003, www.nasdaq.com/about/CorpGovSummary.pdf.