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'Ongoing Push' for Split CEO and Board Chair Roles
Proponents of splitting chief executive officer and board chair roles will find allies in the real estate and hospitality industries, where more than half of top executives polled in FPL Advisory Group’s 2013 “Corporate Governance Outlook” survey said they favor keeping those roles separate.
FPL surveyed more than 80 CEOs, directors, and board governance committee chairs from real estate investment trusts, hospitality companies, and homebuilders.
“There is an ‘ongoing push’ for independent leadership at the board level,” the report finds. “Fifty-two percent . . . of the respondents in the 2013 survey agreed that the chairman and chief executive roles should be separate.”
This figure is down slightly from last year’s finding [PDF], when 54 percent agreed that the roles should be held by different people. But this year only 12 percent disagreed that the roles should be split, compared to 22 percent who disagreed in 2012.
As for what the respondents would like boards to spend more time on, the report notes a growing emphasis on both CEO succession planning and evaluation of CEO performance.
Forty percent said they’d like to increase time spent on succession planning, compared to 32 percent in the 2012 survey. And 31 percent said boards should devote more time to evaluating CEOs—up from 20 percent last year. “This is due to a generation in the process of retiring, in addition to boards carefully evaluating leadership in underperforming companies,” the report says.
The majority of respondents—61 percent—said directors should spend more time on strategy/risk assessment and planning.
Corporate strategy is also an area where boards may need more help. On one hand, 62 percent of respondents said that their board’s understanding of current company strategy is excellent. But far fewer said the same when looking down the road. Only 38 percent rated as excellent the board’s “understanding of the five to 10 key initiatives needed to achieve long-term company objectives.”
Similarly, only 37 percent said the board’s comprehension of “how long-term objectives would position the company in five to 10 years” is excellent.
Finally, if board members want to be evaluated well, they’ll make the best impression by showing up for board meetings and being prepared: 82 percent of respondents said preparation for board meetings was very important in evaluating directors, while 77 percent said the same about meeting attendance.