In February 1992, General Motors announced that it had lost $4.5 billion the prior year, then the worst ever annual loss for an American corporation. In the short-term, things didn’t get better. Losses the following year totaled $23.5 billion.
In the middle of this bleak period, GM’s board took decisive steps. The company’s chairman and CEO Robert Stempel resigned under intense pressure. The board replaced him with two men: John Smith became the company’s CEO, and board member John Smale its chairman.
GM’s appointment of a nonexecutive chair gave traction to a burgeoning movement to separate the chairman and CEO roles in U.S. public companies. In January 1993, three other major companies – American Express, IBM, and Westinghouse – also installed nonexecutive chairs.
You might be tempted to assume this story ends with the widespread bifurcation of the CEO and chairman roles. It does not.