Abuse of power
The litany of court cases concerning executive abuse of power has brought about, correctly, a profound review of how boards and governance should work. Several fundamental points can be made clearly:
- The checks and balance system is essential. The roles of Chairman and Chief Executive should always be kept separate.
- The Chairman runs the Board, the CEO runs the Business, delivering the strategy agreed by the Board.
- The Chairman is responsible for hiring and firing the CEO. He or she monitors the CEO’s performance and. ideally, he or she is like a coach to the CEO.
- The CEO should not rise to become the Chairman – it almost certainly will castrate the incoming CEO.
- The Chairman, though non–executive, should be independent through a 3–5 year contract, and should be expected to be dedicated to the business in terms of time and salary. Portfolio Chairmen are a waste of both.