Risk & Compliance

Three More Companies Split Top Jobs

Separating the roles of the chairman and chief executive officer remains more common at small-caps than at larger companies.
Stephen TaubMay 3, 2004

Seagate Technology has become the latest of a growing number of companies to separate the roles of the chairman and chief executive officer.

The maker of hard-disk drives announced that Bill Watkins, currently president and chief operating officer, will take over as CEO and president on July 3, at the beginning of Seagate’s fiscal year. Current chairman and CEO Steve Luczo will continue as chairman of the board of directors.

Last Wednesday, trucker Landstar Systems also said it would split the titles of chairman and chief executive officer. The company named president and chief operating officer Henry Gerkens as CEO; current chief executive Jeffrey Crowe will retain his chairman position. Their changes take effect July 1.

Also last week, real estate investment trust Inland Real Estate Corp. announced that it will split the chairman and CEO posts.

Earlier this year, Walt Disney Co., Dell Inc., and Oracle Corp. decided to separate the two top executive positions in what has become a growing trend. According to Institutional Shareholder Services, the percentage of companies that have separated the positions of chairman and chief executive officer increased from 45 percent in 2001 to 50.4 percent in 2003. ISS noted that the biggest increase came in the Standard & Poor’s small-cap sector, while the S&P 500 and S&P 400 showed only incremental increases.

According to the Corporate Library, as of March, 377 CEOs in the S&P 500 chair their own boards, compared with 394 last year.

In the past two weeks more than a dozen companies faced shareholder proposals to split the top two jobs. In many cases the resolutions failed, including proposals at Merrill Lynch, Verizon, and Sears Canada.

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