Applied Industrial Technologies Inc. (AIT) appears poised to improve its governance efforts by potentially separating the current position of Chairman & CEO into two positions. This is a result of the incumbent departing in October. The splitting of the positions hasn't happened yet.
So far, a new CEO was appointed and the board announced its plan to reevaluate its leadership structure. While the DI Guy applauds this development, investors could still be stuck with a Chairman & CEO if the AIT board fails to follow through by separating the roles.
In our experience, cases like what could happen at AIT are uncommon. All too often we see the opposite; that is, the Chairman retires, the CEO assumes both roles, leaving shareholders on the losing end of that governance shift.
We hope the board of AIT does not squander this rare opportunity to improve its overall corporate governance by separating the roles and duties of Chairman from those of CEO. Now is the time for those with an interest in the company to let their wishes be known.
The following is excerpted from today's DI Report on AIT: "In Apr-11, David Pugh (Chairman & CEO since Jan-00) announced his intent to retire by the Oct-11 annual meeting. Neil Schrimsher was appointed CEO in Oct-11. Pugh also stepped down from the board. Following Pugh’s departure as Chairman, AIT disclosed that the board intends to reevaluate its leadership structure."