Chief Executive Officer (CEO) and Chair Duality

The chair's task is to lead oversight, while the chief executive's task is to deliver results. When one person does both, the board may find it harder to challenge, and the person controls the agenda, the information and the evaluation of their own performance. Supporters of combining the roles point to clear leadership, speed and deep knowledge of the business, and a few markets keep the dual model as normal practice. Many governance codes, for example in the UK and India, favour separation, and others accept duality if safeguards exist, such as a lead independent director, a majority of independent directors and regular sessions without executives. Opponents point to cases where unchecked leaders took unwise risks. In practice a reviewer looks at who sets the agenda and whether independent directors can say no to the chief executive.

The managers of a packaging firm are paid on annual revenue, so they push through a price-cutting deal that adds sales but erodes margin. Shareholders see only the headline growth. The board later links part of each bonus to returns over three years, puts independent directors on the audit committee and sets a size above which shareholders must approve deals.