Splitting the Roles of the Chairman and the Chief Executive Officer
FACULTY OF COMMERCE
NAME STUDENT NUMBER DEPARTMENT COURSE COURSE CODE LECTURER YEAR ASSINGMENT QUESTION
KUDZANAI ALLEN PARAFFIN N00801001T FINANCE CORPORATE GOVERNANCE CFI 4107 DR. DUBE
PART IV
The split of the Chairman and the Chief Executive Officer (CEO) roles are considered to be clearer in many ways in Good Corporate Governance. Discuss this statement in view of the Zimbabwean context.
There is much debate as to whether companies are better served by splitting the roles of CEO and Chairman. What are the advantages and disadvantages of separating these two positions? Who is in the best position to determine whether it is worthwhile for a particular board? Does that person or group of people have the authority to impose that structure? These questions serve as a good way to look at the overall conflict between giving corporate management enough authority to do the job while maintaining sufficient accountability to make sure that the job is done for the benefit of shareholders. The Zimbabwean Companies Act, King III of South Africa, the British Cadbury Report and the Sarbanes Oxley Act 2002 advocate for the separation or splitting of the roles of the Chairman and Chief Executive Officer. The following paragraphs try to discuss the splitting of these above mentioned roles and with relevance case study of Zimbabwe. According to the King III the roles of the CEO and Chairman should be clearly stated so as to avoid conflicts. The Table below is a summary of the roles according to the Zimbabwean Companies Act and the King III report. Fig: 1A
Chairman
•Setting the ethical tone; •Providing overall leadership; •Participating in the selection of Board members; •Overseeing a formal succession plan for the Board; •Setting the Board work plan; •Being a link between the Board and management; •Maintaining an arms-length relationship; •Adopting a lead role in removing non performing directors; •Mentoring new directors; •Ensuring that directors have a knowledge of their
NAME STUDENT NUMBER DEPARTMENT COURSE COURSE CODE LECTURER YEAR ASSINGMENT QUESTION
KUDZANAI ALLEN PARAFFIN N00801001T FINANCE CORPORATE GOVERNANCE CFI 4107 DR. DUBE
PART IV
The split of the Chairman and the Chief Executive Officer (CEO) roles are considered to be clearer in many ways in Good Corporate Governance. Discuss this statement in view of the Zimbabwean context.
There is much debate as to whether companies are better served by splitting the roles of CEO and Chairman. What are the advantages and disadvantages of separating these two positions? Who is in the best position to determine whether it is worthwhile for a particular board? Does that person or group of people have the authority to impose that structure? These questions serve as a good way to look at the overall conflict between giving corporate management enough authority to do the job while maintaining sufficient accountability to make sure that the job is done for the benefit of shareholders. The Zimbabwean Companies Act, King III of South Africa, the British Cadbury Report and the Sarbanes Oxley Act 2002 advocate for the separation or splitting of the roles of the Chairman and Chief Executive Officer. The following paragraphs try to discuss the splitting of these above mentioned roles and with relevance case study of Zimbabwe. According to the King III the roles of the CEO and Chairman should be clearly stated so as to avoid conflicts. The Table below is a summary of the roles according to the Zimbabwean Companies Act and the King III report. Fig: 1A
Chairman
•Setting the ethical tone; •Providing overall leadership; •Participating in the selection of Board members; •Overseeing a formal succession plan for the Board; •Setting the Board work plan; •Being a link between the Board and management; •Maintaining an arms-length relationship; •Adopting a lead role in removing non performing directors; •Mentoring new directors; •Ensuring that directors have a knowledge of their
Bibliography: Corporate Governance in Developing economies by W. Robert McGee Corporate Governance –A Global Perspective by Kose John & Mark Hireschey South African King III Report Zimbabwean Companies Act 24:03 Cadbury Report Sarbanes Oxley Act 2002