Caterpillar Flips on CEO-Chairman Split in Nod to More Oversightby
Proposal for an independent chairman was rejected in June
Board now thinks appropriate structure is separate roles
Caterpillar Inc.’s board opted to appoint a separate chief executive officer and chairman for the first time since 1990 less than five months after opposing the move.
The world’s largest maker of construction and mining equipment said on Monday that Doug Oberhelman is retiring from both positions next year and will be replaced by company veteran Jim Umpleby as CEO and Blackstone Group LP’s Dave Calhoun as chairman.
The Peoria, Illinois-based company didn’t comment on reasons for creating two separate positions, saying only that corporate governance structures have evolved and the board thinks that’s the appropriate structure at this time.
In June it thought differently. Shareholder John Chevedden’s proposal for an independent director as chairman was rejected at the annual general meeting, according to filings.
“The board believes that having a single person as both chairman of the board and CEO ensures that the company is represented by a single voice to dealers, stockholders, employees and other stakeholders,” according to those filings.
In the dual role, Oberhelman oversaw a rapid expansion that led to record sales in 2012, only to see a commodities downturn erode demand for engines, giant trucks and shovels. When the CEO is also the chairman, that person designs and implements strategy and scrutinizing it is more difficult, according to Mircea Dobre, a Milwaukee-based analyst for Robert W. Baird & Co.
“Maybe it’s more oversight than in the past,” Dobre said by telephone Monday. “It’s net positive from a governance standpoint.”