CAT Caterpillar Inc

By Austen Hufford 

Caterpillar Inc.'s chief executive Jim Umpleby has been named chairman of the machinery giant's board as well, cementing his leadership nearly two year into his tenure.

The move reverses Caterpillar's decision to split the CEO and chairman positions last year. Corporate governance experts say that having a separate chief executive and board leader can improve oversight and decision-making for many companies. About 40% of companies in the S&P 500 keep their CEO and chairman positions separate, according to corporate data provider MyLogIQ.

Caterpillar said on Thursday that the board reviews the leadership structure every two years and agreed to give Mr. Umpleby both roles at the board's Dec. 12 meeting.

Some corporate advisers and executives say one leader holding both roles can manage more decisively. "By having those two positions at the same time, the CEO can feel less pressure and less constrained in terms of making all kinds of decisions," said M.K. Chin, a business professor at Indiana University.

In a regulatory filing earlier this year, Caterpillar said that separating the two positions had allowed Mr. Umpleby to focus on day-to-day management, while Chairman Dave Calhoun led the board and concentrated on oversight of management.

Mr. Calhoun is a senior executive with private-equity firm Blackstone Group LP. Caterpillar said he would become presiding director, a position chosen by independent members of the 12-member board.

Lead directors can help a company's board maintain more effective oversight of a dual CEO-chairman, said Dennis McCuistion, who runs a corporate-governance center at the University of Texas at Dallas.

Mr. Umpleby has overseen strong revenue gains and growth in many of Caterpillar's main markets since he became CEO at the start of 2017. But Caterpillar's shares are down 20% this year over concerns that rising costs due to tariffs, a stronger U.S. dollar and slower growth in China could weigh on future profitability. Caterpillar's shares rose 0.4% on Thursday.

One of Mr. Umpleby first actions as CEO was moving the company's corporate headquarters to Deerfield, Ill., a Chicago suburb, from its longtime home in Peoria, Ill.

A shareholder resolution in 2016 calling for Caterpillar to name an independent director as chairman won 42.8% of votes cast at the company's annual meeting. The company obliged that request by appointing Mr. Calhoun.

Caterpillar's former leader, Doug Oberhelman, stepped down as CEO at the end of 2016. He remained executive chairman until March 31, 2017, when Mr. Calhoun became nonexecutive chairman.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

December 13, 2018 16:50 ET (21:50 GMT)

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