BX Blackstone Inc

By Andrew Tangel and Joann S. Lublin 

Jim Umpleby will be the first Caterpillar Inc. chief executive in a quarter-century to run the equipment-making giant without control over the board as well, a big shift that mirrors U.S. trends in corporate governance.

Caterpillar's next chairman will be Dave Calhoun, 59 years old, a former chief executive of Nielsen Co. BV and current executive at private-equity firm Blackstone Group L.P. Both top Caterpillar roles are being vacated by Doug Oberhelman, who Caterpillar said on Monday will step down as chief executive at the end of this year and as chairman at the end of March.

A Caterpillar spokeswoman wouldn't say why the Peoria, Ill.-based maker of construction and mining equipment decided to split the roles for the first time since 1990. Some shareholders have pressed the board to do so.

"You grade your own papers," said John Chevedden of California, who said he owns 200 of the company's shares. "Why should you be responsible to yourself?"

Mr. Chevedden's resolution urging Caterpillar to name an independent director as chairman won 42.8% of the votes cast at this year's annual meeting, according to a regulatory filing.

Caterpillar board members opposed splitting the top two roles, the latest proxy statement said. A leader with both jobs "ensures that the Company is represented by a single voice to dealers, stockholders, employees and other stakeholders," the proxy added.

On Monday the company changed course. Mr. Chevedden welcomed Caterpillar's move to split the CEO and chairman roles, which Mr. Chevedden said could provide a much-needed boost in morale amid a record sales slump and job cuts.

Other big U.S. businesses have also split the two roles in recent years. As of July 31, 49.7% of S&P 500 companies had separate chairmen and chief executives -- up from 43.8% in 2012, according to Equilar Inc., a consulting firm.

An increasing number of firms have also appointed an independent director to run their boards. Among S&P 500 companies, 35.1% have a nonexecutive chairman, Equilar reported, up from 27.7% in 2012.

Among the latest companies to make the move is Wells, Fargo & Co. Last week, Chairman and CEO John Stumpf resigned amid a sales-tactics scandal. Mr. Stumpf was succeeded by his second-in-command as CEO. Stephen Sanger, the bank's lead independent director, became Wells Fargo's chairman.

Mr. Calhoun's appointment as an outside chairman suggests Caterpillar directors hope he will keep close tabs on 58-year-old Mr. Umpleby's performance, one succession-planning expert suggested. An independent board chairman has powerful influence over a chief executive's pay and job security.

"They want faster change," and will expect Mr. Calhoun to aggressively monitor Mr. Umpleby, predicted Jeffrey Cohn, managing director of global CEO succession planning for recruiters DHR International.

Compared with Mr. Oberhelman, Mr. Calhoun won't "be nearly as patient with change and tough decisions," Mr. Cohn said. "He will have a louder whip."

Bob Tita contributed to this article.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Joann S. Lublin at joann.lublin@wsj.com

(END) Dow Jones Newswires

October 17, 2016 15:07 ET (19:07 GMT)

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