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Rex Redux

May 29, 2008 at 10:25 AM by Jeff Cunningham

In Anglo Saxon Britain, kings were answerable to the Witan, a council of wise elders which was the precursor to Parliament. It is the wave of the future in the boardroom.

 

The Rockefeller’s dispute with Exxon Mobil’s Rex Tillerson over the chairman/CEO role split was rejected by shareholders. And whether that was the right or wrong decision will become evident over time. Either way, the argument of the family members, relatives of John D. Rockefeller who founded Exxon progenitor Standard Oil, does have some merit.

 

There is a genuine business reason for tearing asunder what has long been a staple of the American executive suite – the job of chief executive is becoming distinct philosophically from that of board chair. The CEO is the principal leader and advocate for the company, and while that may be closely aligned with the shareholder, it is no longer the sole focus.

 

The CEO’s job today is indisputably complex: regulators, social activists, customers, partners, all form a haze of interests the CEO must work through in order to run a business effectively. And then the real work begins, setting strategy, approved by the board of course, and execution. The separation of the two roles allows the board to focus on the main shareholder issues, from Say on Pay to Proxy Access to social activism.

 

To CEOs: you are not losing a chairmanship; you are gaining a focused chief executive.

 

It also opens up a new era of governance.

 

Can we find independent board chairs with the requisite skills and reputation? Can they run a board without meddling in operations? Will they become shadow CEOs? Will they stand up to shareholders when necessary? Will they fight the compensation battle when it is not their own wallet being skinned?



Tags: ceo and chairman (1) exxon (6) tillerson (2) say on pay (44) rockefellers (3) (322)

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