Only four companies made a single structure change to combine Chairman and CEO roles since 2000. In all cases, the board had an experienced CEO in place to add the Chairman role. All four companies have independent Lead Directors.
co, long-time (since 1995) Chairman John Morgridge reached the board age limit in 2006 and became Chairman Emeritus. Per a succession plan, long-time (also 1995) CEO John Chambers added the Chairman role.
At McKesson, the roles were split until long-time Chairman (and former CEO) Alan Seelenfreund stepped down in 2002. CEO John Hammergren then added the Chairman role.
When Altria spun off Kraft Foods (now Mondelez International) in 2007, Kraft CEO Irene Rosenfeld was elected Chairman. Rosenfeld, formerly Chairman and CEO of Frito-Lay, a PepsiCo division, had joined Kraft as CEO in 2006 after Roger Deromedi was eased out of the role when financial results were sluggish. Prior to Rosenfeld’s dual appointment, the roles had been split.
Home Depot went outside for a new CEO and eventual Chairman but with mixed results. The roles had been split between founders Arthur Blank (CEO) and Bernard Marcus (Chairman). In December 2000, Robert Nardelli, formerly of GE, joined as CEO and Blank became co-Chairman. A year later Nardelli added the Chairman role. His tenure, widely regarded as unsuccessful, lasted until 2007, when he was replaced in both roles by Francis Blake.
Table 3: Single Combine
* McKesson had co-CEOs from 1999 to 2001, one of whom transitioned to sole CEO.
What the Governance Guidelines Say
Cisco’s guidelines on leadership structure state: “Both independent and management directors, including the CEO, are eligible for appointment as the Chair. The Chair, or if the Chair is not an independent director, one of the independent directors, may be designated by the independent directors to be the ‘Lead Independent Director.’ The Lead Independent Director will be elected by and from the independent directors.”
The current Mondelez governance guidelines say simply: “From time to time, the Board determines the leadership structure that serves it best. The Board has determined that the Chief Executive Officer should also serve as the Chairman of the Board.”
McKesson’s guidelines focus on the Chairman role: “The Board does not require the separation of the offices of the Chairman of the Board (the “Chairman”) and the Chief Executive Officer. The Board shall be free to choose its Chairman in any way that it deems best for the Company at any given point in time. If the Chairman is not an Independent Director, . . . a Lead Independent Director will be elected by a majority of Independent Directors.” The guidelines include a detailed charter for an Independent Lead Director.
Home Depot’s guidelines do not cover leadership structure but do specify the role of the Lead Independent Director.