Reports: Small Companies Like to Separate Chair/CEO While Big Firms Go for Lead Directors

by Gary Larkin for The Governance Center Blog, November 12th, 2010.

While the big takeaway from the inaugural Korn/Ferry Market Cap 100 report on Board Leadership is that few public companies among the large capitalization public companies have non-executive chairs, it doesn’t mean there isn’t a trend towards the European practice. In fact, a recent survey conducted by The Conference Board in collaboration with the Society of Corporate Secretaries and Governance Professionals shows the practice is not so rare among companies with less than $5 billion in revenue.

One theory both studies seem to support is that the larger the company, the less likely it is to separate the Chair and CEO positions although those companies tend to have a lead or presiding director. Meanwhile, fewer smaller companies tend to have both a non-executive chair and a lead director.

The recently released Korn/Ferry report found that only 9 percent of the Korn Ferry Market Cap 100, which includes such companies as Bank of America, Citigroup, Walt Disney, and McDonald’s, are led by non-executive chairs. That didn’t mean that the other companies were all led by a dual CEO/Chair. The survey showed that 12 percent were led by other insiders, such as the former CEO, a founder or a member of the founding family. The report points out that 19 percent of the S&P 500 have non-executive chairs. However, it did show that 49 percent of those boards have a lead director and another 28 percent have a presiding director. (continue reading… )



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