Are investors better served if a company has separate people serving as its chairman and chief executive officer?
That debate will play out this week when shareholders show up at the annual meetings of four companies facing shareholder proposals to split the two top slots, Institutional Shareholder Services (ISS) said in its weekly report to subscribers. The companies are Unocal Corp., Qwest Communications International Inc., JP Morgan Chase & Co., and Longs Drug Stores Corp.
To be sure, the proposals aren’t binding, and the boards at all of the companies oppose the position. Nevertheless, the CEO-chairman connection is a hot issue among boards of directors in general.
“Corporate governance experts have questioned how one person serving as both chairman and CEO can effectively monitor and evaluate his or her own performance,” pointed out the General Board of Pension and Health Benefits of the United Methodist Church in materials filed in the Longs proxy.
At least one organization has proposed a specific independent board member should be charged with keeping tabs on the CEO. The Methodist pension board noted that the National Association of Corporate Directors Blue Ribbon Commission on Director Professionalism recommends that an independent director should be charged with “organizing the board’s evaluation of the CEO and providing continuous ongoing feedback; chairing executive sessions of the board; setting the agenda with the CEO; and leading the board in anticipating and responding to crises.”