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Chairman-CEO Structure - Combined with Transitions

These 34 companies keep the roles of Chairman and CEO combined except in periods of transition, typically so the new CEO has the benefit of working with the former CEO and still Chairman. Duration of the transition period varies, and the transition is sometimes triggered by a merger or timed to the retirement plans of the outgoing Chairman and CEO.

Most of these transitions were planned and orderly. Here are a few of many examples:

  • Samuel Palmisano succeeded Louis Gerstner as CEO of IBM in March 2002, and then as Chairman at the end of 2002. Virginia Rometty succeeded Palmisano as CEO at the beginning of 2012, and then as Chairman in October of that year. Rometty and Palmisano were both long-tenured IBM employees. The company had broken with tradition by hiring Gerstner, a company and industry outsider, to replace the ousted John Akers in 1993.
  • David Dillon has been CEO of Kroger since June of 2003 and the Chairman since June of 2004. He succeeded Joseph Pichler in both roles. Pichler had told the board three years earlier that he wanted to retire by the time he turned 65 in 2004. A 2004 proposal to split the roles, brought by a small shareholder, failed to gain approval.
  • William Greehey was Chairman and CEO of Valero Energy until he retired from the CEO role at the end of 2005. He was succeeded by William Klesse. When Greehey retired as Chairman in January 2007, Klesse was elected Chairman as well.
  • William Stavropoulos was both Chairman and CEO of Dow Chemical (his second stint as CEO) until November 2004, when he stepped down as CEO and Andrew Liveris assumed the role. When Stavropoulos retired as Chairman 16 months later, Liveris succeeded him in that role as well.
  • George David served as Chairman and CEO of United Technologies until he was succeeded as CEO in 2008 by Chief Operating Officer Louis Chenevert, a groomed and designated replacement. When David retired as Chairman 21 months later, Chenevert added the Chairman role.
  • Johnson Controls combines roles but regularly incorporates transition periods of varying length. Alex Molinaroli succeeded Stephen Roell first as CEO in October 2013 and then as Chairman at the start of 2014. Roell had succeeded John Barth in both positions with a three-month transition in 2007. And Barth had succeeded James Keyes in 2002-2003 with a 15-month transition.

The temporary split of roles may be to accommodate a pair of executives following a merger, though the long-term intent is to keep the roles combined. Note that, for purposes of delineating the transition period, we treat a merger as a CEO transition, even though one of the pre-merger CEOs assumes that role. That’s what happened in all four of these cases:

  • When Phillips Petroleum and Conoco merged in 2002, Phillips Chairman and CEO James Mulva became CEO of ConocoPhillips, and Conoco Chairman and CEO Archie Dunham agreed to delay his retirement to serve as Chairman. When he retired in 2004, Mulva added the Chairman role. He was succeeded in both roles in 2012 by Ryan Lance without a transition period.
  • Upon their merger in 2010, Continental Airlines CEO Jeffrey Smisek became CEO of United Continental Holdings, and Glenn Tilton, who had been Chairman and CEO of United, became the Non-Executive Chairman. Smisek added the Chairman role at the end of 2012, and Tilton retired as a board member six months later.
  • As part of the merger agreement that created JPMorgan Chase, the Chairman and CEO roles were temporarily split. William Harrison, the Chairman and CEO of Chase Manhattan, became the CEO, and Douglas Warner, Chairman and CEO of JPMorgan, became Chairman, both as of the beginning of 2001. When Warner retired in November of that year, Harrison added the Chairman role. At the beginning of 2006, Harrison was succeeded in the CEO role by Jamie Dimon, who had been Chairman and CEO of Bank One until it was merged into JPMorgan Chase in 2004. When Harrison retired at the end of 2006, Dimon added the Chairman role. He continues in both roles today, having fought off a 2013 shareholder effort to split the roles.
  • When Verizon Communications began operations in mid-2000, the leaders of Bell Atlantic and GTE shared management responsibility for the company. Former GTE Chairman and CEO Charles R. "Chuck" Lee became Verizon's founding Chairman of the Board and co-CEO, while former Bell Atlantic CEO Ivan Seidenberg became Verizon's founding President and co-CEO. In accordance with a leadership transition plan announced at the time of the merger, Lee retired from Verizon in 2002 and Seidenberg added the Chairman role. When he retired, he was succeeded by Lowell McAdam, who became CEO in August 2011 and Chairman on Jan. 1, 2012.

Sometimes the transition is complicated by a sudden executive departure. In 2005, Merck Chairman and CEO Raymond Gilmartin resigned earlier than anticipated (he would have reached the mandatory CEO retirement of 65 in 2006), after a congressional probe over the safety of a Merck drug. Richard Clark, head of Merck manufacturing, was named CEO, and the company stated publicly that the chairmanship would remain open for at least a year. In the interim, the board restructured the Executive Committee to collectively perform the duties of Chairman. Clark was then appointed Chairman effective April 2007. In November 2009, Merck completed a merger with Schering-Plough. In late 2010, and approaching the mandatory retirement age, Clark stepped down as CEO and was replaced by Merck President Kenneth Frazier. When Clark retired as Chairman a year later, Frazier also succeeded him in that role. 

The longest transition period was at the request of the incoming CEO. Richard M. Kovacevich was Chairman and CEO of Wells Fargo until he retired as CEO in mid-2007 and was succeeded by John Stumpf. Even though Kovacevich was approaching the mandatory retirement age of 65, Stumpf recommended to the board that he be retained to provide guidance and advice while Wells Fargo completed its merger with Wachovia. Kovacevich remained Chairman until the end of 2009, when Stumpf added the Chairman role.

Table 2: Combined with Transitions


Note: Duration column entries are in chronological order, so the most recent transition is listed last.
*  Rotating Presiding Director, no designated Lead Director.

These companies have averaged 1.8 CEO changes since 2000. As you can see from the table, these companies make regular use of CEO-to-Chairman transitions, but not every leadership change has a transition period, and none of their corporate governance guidelines state a preference or policy for transition periods. Fourteen of the companies have had a single CEO change since 2000 with a transition, and another eight have had more than one CEO change, all with transitions. The remaining twelve have had more than one CEO change, sometimes with transition periods and sometimes without; in seven of the twelve, the most recent change included a transition.

Procter & Gamble presents a special case. The company followed the pattern of promoting an insider to CEO and then adding the Chairman role after a sometimes significant transition period. A. G. Lafley had become CEO in mid-2000 and Chairman in mid-2002. He held both roles until Robert McDonald was appointed CEO in mid-2009 and then chairman at year’s end. After several years of mixed business results, McDonald surprisingly retired from both roles in May 2013. Lafley was brought back and now holds both roles again – no transition period needed in this case.

All but two of these companies have clearly designated Lead Directors in place today. Honeywell has a Presiding Director arrangement, and Liberty Mutual is a mutual insurance company (policyholders are shareholders).

The real testament to the purposeful leadership succession planning in these companies is the fact that in 57 of the 61 transitions since 2000 (93%) an insider was promoted to CEO. The exceptions are appointments at Cardinal Health, Sunoco, Archer Daniels Midland, and Honeywell.

The outsider at Cardinal Health had a very brief tenure. In April 2006, the company appointed R. Kerry Clark as CEO, replacing long-term CEO and founder Robert Walker. Clark had been vice chairman of Procter & Gamble and recently responsible for its $20 billion Global Family Health business. In  September 2007, Clark was also named Chairman. In Aug 2008, George Barrett, who had served as vice chairman and CEO of Healthcare Supply Chain Services since joining Cardinal Health in 2007, replaced Clark in both roles.

After 40 years with the company and a decade as CEO, Robert Campbell retired as Chairman and CEO of Sunoco in May 2000 and was succeeded in both roles by John Drosdick, who had been President for the previous four years. He retired in 2008, during an industry downturn. Sunoco then hired an outsider, Lynn Elsenhans, a Shell Oil manufacturing executive, as CEO, and she added the Chairman role in 2009. She was succeeded by CFO Brian MacDonald as CEO in March 2012, and he became Chairman two months later. Elsenhans’ departure seemed abrupt, and the company posted losses totaling $1.2B on her watch. However, according to a Bloomberg News article, she had met the board’s objectives by “spending almost four years selling or shuttering two-thirds of the 121-year-old refiner’s assets to focus its business on oil pipelines and fuel retailing.”22  The company was then acquired by Energy Transfer Partners, and Robert Owens became CEO.

The other two companies have fared well with outsiders. Archer Daniels Midland appointed former Chevron Executive Patricia Woertz to succeed G. Allen Andreas as CEO in 2006 and as Chairman the following year. She continues in both positions. After a failed merger with GE, Honeywell CEO Michael Bonsignore was forced to retire in 2001. Larry Bossidy stepped in as interim CEO until Dave Cote, former Chairman and CEO of TRW and a former GE exec, was named CEO in February 2002 and Chairman in June. He remains in both positions more than a decade later. 

What the Governance Guidelines Say

Governance guidelines in most of these corporations mention the question of combining or splitting Chairman and CEO roles. The majority simply maintain flexibility. Lockheed Martin’s statement is representative and very concise: “The Corporation’s policy as to whether the role of the Chief Executive Officer and Chairman should be separate is to adopt the practice which best serves the Corporation’s needs at any particular time.”

Many of the statements emphasize the need for flexibility, as in HCA’s: “The Company’s bylaws provide maximum flexibility in choosing a Chairman of the Board and a Chief Executive Officer. The bylaws provide that such offices may be held by the same or different people. This flexibility leaves the Board free to make this choice any way that it determines is in the best interest of the Company.”

The very first entry in Target’s governance guidelines is on leadership roles:  “The Chairman of the Board may, but is not required to, also hold the office of the Chief Executive Officer. The offices of CEO and Chairman of the Board are separately evaluated by the independent members of the Board of Directors each year.”

Seven of the companies emphasize that they have “no policy” regarding combining roles. At Valero, the logic is around succession planning: “The Board does not have a general policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer. The Board believes that this issue is best addressed as part of the Company’s overall succession planning process, and that it is in the best interests of the Company for the Board to make any determination regarding separation of such offices upon any election of a new Chief Executive Officer or Chairman of the Board.”

Wells Fargo references its balanced governance profile: “Given the existence of a lead independent director and the Company’s overall governance profile, as well as the Board’s belief that it should maintain the flexibility to determine the leadership of the Company, the Board does not have a fixed policy regarding the separation of the offices of the Chairman of the Board and the Chief Executive Officer.”

Another seven of these companies state the preference for combined roles or simply assert the appropriateness of the current combined structure. Kroger’s guidelines, for example, state: “The Board believes that it is in the best interests of the Company and its shareholders for one person to serve as Chairman and Chief Executive Officer. The Board recognizes that there might be circumstances under which the best interests of the Company and its shareholders require the separation of these offices. Upon selection of a new Chief Executive Officer, or upon a significant change in circumstances, the Board will determine whether a separation of the offices is appropriate.”

Caterpillar stresses its board’s longstanding independence alongside the preference for combined roles:
In 1999, the Caterpillar Board developed and published guidelines on corporate governance, which among other provisions includes the establishment of a fully independent Board of Directors, with the sole exception of its Chairman, and a fully independent Compensation Committee.


The Board believes the positions of Chief Executive Officer and Chairman of the Board should be combined to provide unified leadership and direction. The Board reserves the right to adopt a different policy should circumstances change. In addition, the independent directors have elected the Chairman of the Governance Committee, who is an independent director, as the presiding director.

John Deere cites both tradition and lack of necessity:

While some of the conventional functions of the Chairman (e.g., the setting of agendas for Board and committee meetings) have been and are shared by all directors, the position of Chairman has traditionally been held by Deere's Chief Executive Officer. The Board believes that the decision as to who should serve as Chairman and Chief Executive Officer and whether the offices should be combined or separated is the proper responsibility of the Board.

The Board generally believes that having an independent Chairman is unnecessary in normal circumstances. Currently, the Board has selected an independent director to serve as a Presiding Director. If the Chairman's position is held by an independent outside director, then the duties of the Presiding Director will be assumed by the Chairman.

A recent Merck proxy statement asserts the validity of the currently combined roles: “The Board believes that the Company and its shareholders are well-served by the Board’s current leadership structure. Having an independent Lead Director vested with key duties and responsibilities and four independent Board committees chaired by independent directors provides a formal structure for strong independent oversight of the Chairman and Chief Executive Officer and the rest of our management team.”

The JPMorgan Chase guidelines explicitly vest the choice of structure in its independent directors: “The Board shall annually, and in connection with succession planning and the selection of a new Chief Executive Officer, determine whether the role of Chairman shall be a non-executive position or combined with that of the Chief Executive Officer, based on the particular composition of the Board, the person then serving, or selected to serve, as Chief Executive Officer and the facts and circumstances at the time. Such determination shall be made by the non-management directors, with discussion guided by the Lead Independent Director.”

Several of these companies – including IBM, Johnson & Johnson, MetLife, Procter & Gamble, and Verizon – do not state their stances on leadership structure in their corporate governance guidelines or principles, but simply affirm the current structure in their proxy statements. MetLife’s is representative:

After careful consideration, in 2006, the Board of Directors determined that the preferred leadership structure for MetLife would be a Chairman of the Board who also is the Company’s Chief Executive Officer, and a separate empowered Lead Director who also is an Independent Director. The successful partnership between the executive Chairman of the Board and the independent Lead Director has provided strong, independent oversight of management and reaffirms to the Board that this leadership structure continues to be the most appropriate and effective model for the Company.

Liberty Mutual is a collection of private companies and publishes no governance guidelines or bylaws on its web site, nor does it file annual proxy statements. It’s worth noting that the company has come under fire for executive perks, weak governance, and poor transparency.

While almost all of these corporations have designated Lead Directors, the strength of commitment to appointing and relying on Lead Directors varies:
  • Most have provisions for Lead Directors to preside over mandatory meetings of independent directors. In three of the companies – Coca-Cola, HCA, and Honeywell – that is the only role stated in the corporate governance guidelines.
  • Guidelines in a majority of the companies seem to call for always appointing a Lead Director, even if the Chairman and CEO roles are split. The duties of Lead Director are spelled out in their governance guidelines.
  • In ten companies, a Lead Director – with specific charter – must be appointed whenever the roles of Chairman and CEO are combined.
  • Two of the companies – New York Life and Target – make the appointment of a Lead Director optional, at the discretion of the independent directors.

Of the five companies that make Lead Directors optional, four currently do have designated Lead Directors. A total of 32 of the 34 of the companies in the Combined with Transitions category have Lead Directors.

Besides Liberty Mutual, the only exception is Honeywell, but its 2013 proxy statement explains the preference for Presiding over Lead directors:

Honeywell utilizes a ‘‘Presiding Director’’ position which rotates on a meeting-by-meeting basis in accordance with years of service on the Board. . . . The Board believes that its Presiding Director system combined with the Board practices and procedures . . . , rather than selection of a single individual to fill the role of ‘‘Lead Director,’’ encourages full engagement of all of the independent directors in the executive sessions, avoids unnecessary hierarchy, and appropriately and effectively balances the combined Chairman/CEO role.

The other guidelines of note regarding a Lead Director are at Archer Daniels Midland, which are blunt about the occasion when a Lead Director is most needed: “The position of Lead Director is established to facilitate the fulfillment by the Board of its responsibilities by ensuring that the Board operates independently of management and by providing the Board with independent leadership, particularly in instances where the joint roles of Chairman of the Board and Chief Executive could potentially be in conflict.”

Finally, it’s natural that the CEO be involved in selecting the Lead Director since the two need to work together regularly. However, ConocoPhillips is unique in making that explicit: “From time to time the non-employee directors will, in consultation with the Chief Executive Officer, select a Lead Director from among the non-employee directors.”

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