Separation anxiety: in many situations, it may be far from clear whether the roles of CEO and chair should be filled by different persons.

• Author: Raymond, Doug
• Position: LEGAL BRIEF

OVER THE LAST DECADE, a growing chorus of voices has been calling for the separation of the roles at the chief executive officer and chair of the board of directors of a public company. If a core function of the board is monitoring and oversight of management, that role is significantly compromised, so the argument goes, if the manager is in charge of the oversight body. Isn't this like the fox guarding the hen house? And with the push from many quarters towards a governance model based on skepticism of managements' alignment with the shareholders, this approach may appear pretty reasonable.

Of course, there is another model for board governance, where the directors are more focused on effective stewardship of the business than on scrutinizing management--and questioning their motives. This more collegial model also includes significant oversight responsibilities but under most circumstances they are not seen as the board's primary functions.

With the current focus on board independence and in light of the increasing number of shareholder proposals demanding the separation of chair/CEO positions, boards should engage in a considered discussion as to whether the roles of CEO and chair should be filled by different persons. This discussion should include both the current CEO and, if not the same person, the chair. It should also include a meaningful opportunity for the other directors to separately discuss the mailer on a confidential basis.

However, the answer to this inquiry can be far from clear, and may largely depend on where a particular board sits on the continuum between the oversight and stewardship models of corporate governance. It also inevitably depends on the culture of the boardroom and how the directors interrelate. As with much else in the boardroom, as in life, it is rare that one size fits all. Each board should decide how this issue should be handled to best support its particular governance structure and culture.

Where command is unified in a combined CEO/chair, decision making can be streamlined, particularly in turbulent times or during a crisis. A single leader can speak with clear and unambiguous authority, making it easier to set objectives. Dividing these roles may create tensions within the decision-making process and in establishing - accountability for those decisions, particularly if the separate functions of the positions are not well articulated. This lack of clarity can become a distraction both for...