The number of non-executive chairmen at companies in North America has been increasing year by year. Recent figures, according to the 2008 Spencer Stuart Board Index, indicate that the last decade has seen a growing trend in separating the roles of the Chief Executive Officer (ceo) and the chairman of the board. In 1998, 16% of the s&p 500 featured distinct chairmen. Data shows that in 2008 as many as 39% appoint someone other than the ceo to chair the board. Traditionally, even in companies that split the role, the chairman was not completely independent, but rather commonly the ex-ceo or another related party. During the past four years, Spencer Stuart, a sponsor of the Chairmen’s Forum, has tracked the trend of appointing independent chairmen who have no prior relationship with the company. In 2004, just 7.6% of all chairmen were designated as independent of management. In 2007, the figure rose to 13% and climbed to 16% in 2008. A RiskMetrics study, expanded to include s&p Mid and SmallCap companies, shows the appointment of independent non-exective chairmen to be slightly higher at 23% and 27% respectively for 2008, a cumulative increase of 17% from 2006 for the s&p 1500.
Despite this movement toward independent chairmanship, there is little practical advice on what a non-executive chairman does and how the role differs from a chairman with executive powers. Also lacking is guidance on the profile and the ideal attributes of non-executive chairs, or whether appointing a lead director is an adequate alternative to separating the roles of chairman and ceo. Through the following sections, this report seeks to address these and other issues as they relate to the non-executive chairman.
Millstein Center for Corporate Governance and Performance,
Chairing the Board: The Case for Independent Leadership in Corporate North America,
Available at: https://scholarship.law.columbia.edu/global_markets_corporate_ownership/34
Policy Briefing 4