Board Leadership and Ceo-Chairman Split: a Literature Review |
With the advent ofvarious changes in Corporate Law and in the field of Corporate Governance,several issues have come up that need greater in depth study in order to find asolution. One of them is the Great Divide between the positions of ChiefExecutive Officer, on one hand and Chairman, on the other. Historically,Chairman was the senior most member of the board. However, later with theintroduction of the “Separate Ownership and Management” feature in a Companyform of business organization, the term CEO was introduced. The board ofdirectors also became a monitoring body instead of advisory body. In the 1990’san urgent demand for independent directors on board was raised which culminatedinto a debate of CEO-Chairman split. There are some in the favour of splittingthe positions as it would lead a separate independent Chairman monitoring a CEOleading to transparency and better decision making. While there are someagainst the splitting as it gives a passive signal to the rest of the boardthat all activities will be conducted by two. This paper tries to examine therelationship between the two roles, the advantages and disadvantages associatedwith splitting the positions, going through the Literature along with the currentlegal developments in this area in India and some other countries and finallytries to provide a conclusion.