From: Warren Ward
Received: April 3
Sometimes, timing is everything. We recently learned that a 1.5-year shareholder in Cummins has proposed that the roles of chairman and CEO be separated. He believes this would be in the best interests of shareholders because at least some executives are paid in a way that is not tied to company performance.
On the other hand, we have the January-February issue of Harvard Business Review. The lead article names the 100 best CEOs in the world, based on total shareholder returns and the overall increase in market capitalization. They reviewed the CEOs of 3,143 companies trading on five different stock exchanges from around the world. As you might expect from this institution’s publication, analysis was rigorous.
The now-deceased CEO of Apple, Steve Jobs, was number one. Of more import to most Columbus residents, number 51 was recently retired Cummins Chairman and CEO Tim Solso. Based on industry performance, total shareholder return during his tenure was 734 percent.
Whether Tom Linebarger’s tenure is as successful remains to be seen, but with a board that is made up overwhelmingly of outsiders (non-company employees), I’d say they are likely to continue making good decisions on behalf of the company’s owners.
If it’s Mr. Chevedden’s wish to unlock shareholder returns, I suggest he look elsewhere. I have been a shareholder somewhat longer than Mr. Chevedden. I will be at the annual meeting, and I will be voting against his proposal.