"When Citigroup last week gave CEO Jane Fraser the additional role of board of directors' chair, the event was a widely covered ho-hum. CEOs are often board chairs as well, and the move merely gave her the same positions held by JPMorgan Chase's Jamie Dimon and Goldman Sachs's David Solomon. But the news isn't quite as ho-hum as it seems."
"The logic of separating CEOs from board chairs may seem obvious, but it was flouted for decades when individual investors owned most corporate shares and mostly voted the way the company wanted, if they voted at all. "There was no shareholder large enough to demand a seat on the board," Elson says. In that environment, CEOs in 1990 were also board chairs at more than 90% of traded companies."
When Citigroup added the board chair title to CEO Jane Fraser, the move matched common practice at major banks but raised governance concerns. Charles Elson said a CEO chairing the board conflicts with the board's duty to oversee the CEO. Citi notes that the lead independent director organizes and leads sessions of independent directors to evaluate CEO performance. Historically, CEOs often served as board chairs when dispersed individual investors dominated share ownership. Institutional investors' rise in the 1990s shifted power toward shareholders and increased demands for separate leadership. Some CEOs used board perks to blunt oversight.
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