Yimou Li
TAIPEI (Reuters) – Apple (NASDAQ:) supplier Foxconn is considering introducing a system of CEO rotation as part of an overhaul of its management structure aimed at nurturing future talent, three sources briefed on the matter told Reuters.
For companies around the world, a rotating CEO structure is rare, but analysts say it can promote teamwork and prevent leadership entrenchment, as well as develop the next generation of talent.
One of the sources said the plan comes in response to repeated calls from investors to strengthen corporate governance by separating the role of the CEO from the chairman.
Yang Liu has held both positions since 2019 at the 50-year-old Taiwanese company, which is the world’s largest contract electronics manufacturer and a major assembler of iPhones.
Senior executives at Foxconn, whose clients also include Amazon, have been discussing a CEO rotation plan for several months, three sources with direct knowledge of the matter said. They all requested anonymity due to the sensitivity of the matter.
Foxconn declined to comment.
Two of the three sources said one option being considered is to appoint four CEOs on a rotating six-month basis. Details have not yet been finalized and are subject to change, they said.
All three sources said no final decision had been made as Foxconn executives discussed how the proposed system would work, possible candidates for rotating CEO roles, their responsibilities and how they would work with Liu.
One of the sources said the rotating CEOs are expected to oversee Foxconn’s six core businesses, including smartphones, personal computers and TVs, but excluding major publicly traded subsidiaries such as Foxconn Interconnect Technology, FIH Mobile and Foxconn Industrial Internet.
Another source said the change could mark the end of Foxconn’s “one-man rule” system, as it would create a structure in which managers would take turns overseeing Foxconn’s operations, which include hundreds of subsidiaries and operations in more than 20 countries.
Liu took over the duties of chairman and CEO following the 2019 retirement of billionaire founder Terry Gou, who founded the company in 1974 and held both titles for most of his tenure.
Chinese tech giant Huawei introduced a CEO rotation system in 2011, under which three top executives take turns serving as CEO for six months.
Shares of Foxconn, formally called Hon Hai Precision Industry Co Ltd, fell more than 2% on Thursday morning, compared with a 0.2% fall in the broader market.
They have jumped nearly 45% this year, partly in response to the artificial intelligence boom, compared with a 16% rise in the main index.
In March, Foxconn adopted a more optimistic outlook for this year, saying it expected strong revenue growth driven by demand for artificial intelligence servers.