The firm unveils future plans to separate role of Chairman and CEO
The Depository Trust & Clearing Corporation (DTCC), which operates a global registry for credit default-swaps trades, announced today its plans to implement a corporate governance structure to better meet global standards by creating a chairman of the board role that is separate from the chief executive officer position, the company said.
Over the past two years, the board of directors and DTCC executive management team has been engaged in considerable discussion that lead to its recently completed Governance Review process. However, the management team pitched this separation of roles in the early stages of the governance review.
After the recent financial crisis, finance and banking firms have been beefing up its investigation of risk management. Now, DTCC’s decision to form a separate chairman position follows practices set by many companies in Europe, where DTCC hopes to expand its arm. Moreover, the New York based group claims to have been monitoring global trends on governance, particularly in Europe.
According to the company, the addition of a chairman would bring the board closer to its goal of providing superior oversight of risk management.
Furthermore, under the new organizational structure, the CEO will be expected to work closely with the chairman while fulfilling other responsibilities of overseeing DTCC’s overall business strategy, business operations, systems, customer outreach, and staff functions such as finance, human resource, and many others as it relates to the everyday operation of the company,
Additionally, as DTCC seeks to enhance independence and direct accountability, the directors decided that the firm needs a chairman who reports independently to the board on risk management and compliance activities.
It is expected that the enhanced governance model will provide ‘optimal’ checks and balances between the businesses and control functions, with separate and independent reporting lines to the board, the company said.
‘The challenge now is to meet the increasing expectations of the industry, our regulators and other stakeholders regarding our ability to manage and mitigate risk,’ says Art Certosimo, presiding director of the company’s board.
Don Donahue will continue to serve as CEO and DTCC has hired Lose Angeles based Korn/Ferry International to conduct the search for a new chairman, which is anticipated to be filled in early 2011.
‘With this governance model, DTCC will be even better positioned to demonstrate the strengths that are a hallmark of its global reputation for bringing certainty, safety and soundness to our capital markets,’ Certosimo added.
