Risk & Compliance

Cisco Combines Chairman and CEO Roles

The company's decision to have a single person lead both management and the board displays particular faith in Chambers's abilities and longevity a...
Stephen TaubJune 9, 2006

Bucking a widespread trend , Cisco Systems has tapped John Chambers to succeed John Morgridge as chairman and to continue to serve as the company’s CEO. The appointment will go into effect in November, when Cisco holds its annual shareholder meeting.

The decision, the result of a unanimous vote by the board, runs counter to a widespread trend at U.S. companies. During the past few years, a growing number of the largest American companies have been embracing the practice of separating the chairman and CEO roles, executives at Russell Reynolds Associates, an executive-search firm, note.

For example, in 2005, the percentage of S&P 500 companies that split the two roles climbed to 29 percent, up from 21 percent in 2001. Meanwhile, the share of Nasdaq 100 companies dividing the posts rose from 41 percent to 45 percent during the same time period. Further, in a survey of 100 board members, Russell Reynolds found that 59 percent advocated the division. The poll participants included chairmen, nonexecutive independent directors, and nonexecutive chairmen.

“Corporate leadership is more open to splitting the roles than it was several years ago,” Andrea Redmond of Russell Reynolds said when the study was published earlier this year. “The advantage of having the roles separated is that the CEO can focus on leading the company, while the chairman can focus on leading the board as well as monitoring corporate governance and shareholder issues.”

Cisco’s decision to have a single person lead both management and the board displays particular faith in Chambers’s abilities and longevity at the company. “Today’s unanimous decision by the board of directors underscores our high level of confidence in John Chambers’s leadership over his 15-year tenure at Cisco, and his ability to shape the future direction of the company,” said Morgridge.