Cutting the Cake

Sara Lee, as the Financial Times reports today, has bowed to the wishes of activist shareholder Norges Bank Investment Management, to separate the two offices of chairman and chief executive when Brenda Barnes steps down as head of the group.  Corporate governance experts will continue to debate the wisdom of combined or separate roles at the head of corporate management but it seems to us to be of some value in managing corporate reputations and corporate brands to have the roles separated.

In a crisis, it can be difficult for the combined chairman/chief executive to speak credibly on behalf of the company when his or her leadership is implicated in the crisis itself.  Having a chairman functioning as chief spokesperson provides a level of distance and transparency that gives the board more options in a crisis than simply retaining or disposing of the chief executive.

In the United States, the chairman/chief executive is expected to be the visionary but also accountable for quarterly performance.  We think a separate chairman could be valuable in representing not just the vision of the company but embody its heritage, culture and values, while allowing the chief executive to drive the company forward through innovation and performance.  In the final analysis, the quality of individual leaders is what wil count most, but more companies might find twin roles a worthwhile enhancement.

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