The following is an op-ed by Roy Smith, published in Financial News on 6/3/13:
The decisive victory that allows Jamie Dimon to continue in his dual roles as chairman and chief executive of JP Morgan Chase raised once again the issue of whether or not holding both titles is detrimental to corporate governance.
Dimon won handily, as he should have done. But the vote was a disappointment to some corporate governance wonks, who believe all large publicly traded companies should have the same leadership structure.
Forceful leaders, they believe, need to be subject to the restraining influences of wise, avuncular, chairmen to keep the ship steady.
But no one has found compelling evidence to suggest that changing from single to dual roles noticeably improves corporate performance; the underlying strength of the board is much more important than whether one individual should have concentrated executive power.
The chief executives of the three most successful US banks, JP Morgan, Goldman Sachs and Wells Fargo, also occupy the position of chairman. (But so did the CEOs of Merrill Lynch, Bear Stearns, Lehman Brothers and Wachovia.)
And dual structure failed to keep AIG, Federal National Mortgage Association (Fannie Mae) or Citigroup out of trouble.
In Britain, similar dual commands failed to rein in Royal Bank of Scotland, Lloyds Banking Group or Barclays.
Years ago, the title of chief executive officer didn’t exist in the US. Instead most companies had different individuals as chairman and president, but it wasn’t always clear who was boss and accountable for the company’s results. Read the full article as published in Financial News.
Roy C. Smith is the Kenneth G. Langone Professor of Entrepreneurship and Finance and a Professor of Management Practice.