Upcoming News Corp. Shareholder Vote Prompts Debate over Chairman, CEO Roles

A spokesman for News Corp. couldn't immediately be reached for comment. But last week, the company defended its leadership. In a statement, the company conceded that the News of the World phone-hacking scandal could affect the short-term finances of the company. Nevertheless, the company said the current board has been beneficial for shareholders' interests.

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"Our broad, diverse group of businesses across the globe is extremely strong today," the statement said. "The drivers of our business are intact, our position is strong and our future is promising."

A MOVEMENT TOWARD CHAIRMAN/CEO SPLIT

Unlike their European counterparts, who largely separate the roles of CEO and chairman, American companies tend to designate one person for both roles.  

However, this appears to be changing. GovernanceMetrics International, a shareholder advisory firm focusing on corporate governance, notes that the chairman and CEO of 290 of S&P 500 companies (58 percent) are the same people, down from 326 companies (65.2 percent) five years earlier.

GMI ranks corporations based upon what they view as good corporate governance. News Corp. was recently put on GMI's "Risk List"- a list of 10 companies "with specific patterns of risk that GMI believes are critical for investors and other corporate stakeholders to monitor."

Companies with separate CEO's and Chairmen receive higher scores. But the catch is that the board leader must be considered independent, which GMI defines as "no former ties to the company either through business dealings or as former employee either in a CEO, other executive, or management employee, and no family ties to the CEO."

Of the 210 companies that have split the role of chairman and CEO, GMI notes that only 70 board leaders fit the criteria of independent.

In some instances, it may make sense for a former CEO to serve as executive chairman of the board while the new company head becomes acquainted with his job¸ Paul Hodgson, Chief Communications Officer of and Senior Research Associate for GMI, told IBTimes. For example, he said that it made sense for Steve Jobs to take on the role as executive chairman of Apple in order to provide guidance to new CEO Tim Cook.

Tanner said CBIS has introduced similar resolutions for other companies, including Time Warner and Goldman Sachs, although Jeff Bewkes of Time Warner and Lloyd Blankfein of Goldman Sachs still head both the board and the company management.