This Article critically examines the competing arguments related to splitting the roles of CEO and board chair. Although the campaign for independent board chairs has received increased attention from shareholders and regulators, there has been very little academic analysis of such campaign. This Article seeks to fill this void not only by examining the campaign, but also by assessing its implications in light of the available empirical evidence and normative claims. Based on this assessment, this Article offers two conclusions. First, while there appear to be costs associated with splitting the roles of CEO and board chair, those costs likely have been overstated. Second, there are clear benefits associated with having an independent board chair. However, whether a corporation can take advantage of those benefits may depend upon various factors and circumstances, some of which may be difficult to achieve. Whether corporations can realize the benefits of separating the board and CEO roles may depend on whether corporations have truly independent board chairs, and many corporations do not. It also may depend on corporate size as well as the extent to which corporations have in place structures and processes ensuring that their outside board chairs have access to appropriate and diverse information sources so that they need not rely solely on their inside CEOs and thus can be effective monitors and leaders. Hence, this Article offers conditional support for splitting the roles of CEO and board chair. As a result, this Article argues that efforts to mandate such a split at all public companies could be counterproductive because such efforts may not appropriately consider the costs of such a split; and those efforts may not appropriately consider that while there are clear benefits to such a split, whether those benefits can be realized may depend on several variables that may not be present at every company. In this regard, when considering whether to split the roles of CEO and board chair, caution is warranted.
corporations, corporate governance, splitting the roles of CEO and Board Chair
Fairfax, Lisa, "Separation Anxiety: A Cautious Endorsement of the Independent Board Chair" (2014). Faculty Scholarship at Penn Law. 2414.