Dennis Carey – Executive Recruitment

In May 2009, Senator Charles Schumer, Democrat of New York has proposed legislation which will split the roles of chairman and CEO in public companies. Dennis Carey sees this proposal as one more of Washington’s bids to keep the sector of free enterprise safe from the scourge of democracy. The last time Washington got involved it was the Sarbanes-Oxley Act, which many CEOs believe forces boards to pay more attention to their adherence to this law than to leading their companies to success.

Believing that this latest bid to control corporate culture flies in the face of common sense and proven results, Dennis Carey explains why this latest reaction to the depressed worldwide economy is a mistake.

According to Mr. Carey, today’s corporations practice good management and governance with the roles of chairman and CEO combined in one position. Dennis Carey points to the fact that over 60% of the largest corporations in the United States today in fact do combine the chair and CEO roles. And there is a good reason for this fact. This system of corporate governance popular in the American system allows flexibility when responding to the unique culture, personality, history and dynamics of each board.

It has not been proven in any way, according to Carey, that splitting the CEO and chairman roles, as it is commonly practiced in European corporate culture and in some cases in the U.S., improves the success of those companies compared to the combined-role companies here in America.

In this case, it makes little sense to mandate splitting of the chair and CEO roles if there has not been shown to be any improved outcome for the company. The opposite. It would prove more prudent to “not fix something if it isn’t broken.”