There has long been a debate in corporate governance circles whether consolidating the power of the chief executive's office with that of board chairman is ultimately in the best interest of companies and their shareholders. Yesterday, the board of Abercrombie & Fitch voted with those who advocate for split roles when it took the chairman title away from embattled CEO Michael Jeffries.
Last month, the board gave a new contract to Mr. Jeffries who has been criticized by analysts and investors for A&F's lackluster performance in recent years. The chain has only achieved one quarterly increase in same-store sales over the past seven quarters.
A&F's board appointed former Sears and Saks Fifth Avenue executive Arthur Martinez to assume the role of chairman effective immediately.
Corporate governance expert Eleanor Bloxham called that the A&F board's action "historic" in an interview with The Columbus Dispatch. She added, "I know it will please shareholders and help the board execute a succession plan they intend to work on."
"Separating the chairman and CEO functions addresses recent shareholder concerns over leadership and also brings fresh perspective going forward," Jefferies analyst Randal Konik told Reuters.
Do you generally support or oppose having one person hold the titles of CEO and chairman?