Fewer than 50% of companies had independent Chairmen, and companies with revenue between $100 M – $1 B are slightly more prone to allowing one person to hold the combined roles.
SO WHERE WERE THE DIFFERENCES?
Companies with independent chairmen outperformed companies that combined roles.
The performance edge was more marked in larger companies.
There is a smaller edge for companies with revenue between $100 M – $1 B.
The smaller edge for companies with revenue between $100 M – $1 B may be due to the fact that there has not been an impetus to recruit an independent Chair when a strong founder has successfully transitioned from start-up to mid-sized company. Formalizing a separate Chair role tends to happen as companies mature.
Companies with independent chairs do nominally outperform their peers based on median 3-year growth rates. However, the labels can mask actual division of responsibilities.
In some companies, a CEO transitioning to a Chair-only role may influence selection of a cooperative replacement CEO who lets the Chair still call the shots. In other companies, a strong CEO forced to accept an “independent” Chair may influence the selection to retain as much free reign as possible.
This is a controversial area and one that merits more investigation.