How to Separate the Roles of Chairman and CEO

Abstract:     
Under pressure from shareholders and regulators to improve corporate governance, companies in the United States are increasingly splitting the roles of chairman and CEO. Experience from the United Kingdom, where the same shift began a decade ago, shows that what may seem like a straightforward change of responsibilities is actually a complicated process influenced by unpredictable variables, such as the personal psychology of the two people chosen for the posts. Many companies thought they were splitting the roles well, only to stumble along the way.

Company directors, who bear ultimate responsibility for making the split succeed, can take practical steps to smooth the process, from choosing the best moment for implementing the change to ensuring that the executives chosen to hold these two positions have complementary characters and ambitions.

Number of Pages in PDF File: 12

Keywords: corporate governance, separation of chairman and CEO roles

JEL Classification: G34

Accepted Paper Series