Australian corporate CEOs are less powerful than they once were

Cultural and customary differences worldwide influence whether corporations have a Chief Executive Officer (CEO) who is also a director and whether this director may be the chairman of the board of directors. In Australia and most other Commonwealth countries, including the United Kingdom it is usual for the positions to be held by different individuals, in accordance with the report of the Committee on the Financial Aspects of Corporate Government conducted by the Parliament of the United Kingdom in 1992.1 This is different from the model in the United States of America in which the CEO also holds the position of chairman giving one person power to determine the direction of the corporation.
2 In Australia, the separation of the CEO from the board may have implications for the power that CEOs have in corporations. Excluding the position from the board provides a tangible diminution of power. It is less clear, however, whether the power of the CEO is also diminished where the CEO and chair are separate. A further question arising from separating the CEO and the chair is whether the power of the CEO in Australia is further diminished because the CEO then has a higher duty of care than a non-executive director under current Australian Law, as an officer of the corporation.3 Additionally there is evidence in Australian case law that corporate CEOs are becoming less powerful with the rise of the Chief Financial Officer (CFO).