Today, PNM Resources (NYSE: PNM) announced the retirement of Chairman and former CEO Jeff Sterba. Patricia Vincent-Collawn, who has served as CEO since Sterba’s retirement from the position in March 2010, was elected Chairman effective 31-Dec-11. Collawn also served as COO from August 2008 to March 2010.
Following Sterba’s retirement as CEO and prior to his retirement as Chairman, PNM Resources was following what is arguably the corporate governance best practice of separating the positions of CEO and chairman. The CEO represents the corporation and management while the Chairman represents all shareholders. When the CEO and chairman are one in the same person, the risk is that the balance of power between management and shareholders may be negatively affected.
In the 2011 proxy, PNM said the Board believed that it should retain flexibility to make a judgment about its leadership structure. At that time, the Board believed Sterba was the best qualified Chairman and Collawan was the best qualified CEO.
From the 2011 Proxy:
The Board has addressed the question of whether to separate the offices of Chairman and CEO on several occasions and has reached different determinations, based on its conclusions of what was in the best interests of the Company and its shareholders at the time. The Board has separated the two offices on four different occasions since the late 1980s. Most recently, upon the retirement of Mr. Jeffry E. Sterba, the Board separated the two offices again effective March 1, 2010. The Board believes that it should retain the flexibility to make a judgment regarding its leadership structure. Currently, the Board believes that separating the two offices allows the Board to retain Mr. Sterba as the best qualified person to serve as Chairman of the Board and to appoint Ms. Patricia K. Collawn as the best qualified person to serve as CEO.
Here is PNM's press release announcing the change in chairman.