Lead Directors: 2nd Best or A Valuable Tool?

It’s common knowledge that separating the roles of CEO and Board Chairman (see Chairmen’s Forum) is considered by most the epitome of best practice, but is far from universal. In the wake of Sarbanes Oxley, many companies designated a genuinely independent director as a “lead director” to run meetings of non-management directors and represent independent directors in dealings with the CEO and with respect to review of the CEO’s performance. The NYSE and NASDAQ now require a comparable designation.

Joann Lublin of the WSJ on Monday September 13, 2010 had an excellent article on this topic entitled “Lead Directors Gain Clout to Counterbalance Strong CEO’s,” on the experiences of many lead directors and the value they are adding at companies such as NCR, E*Trade and Occidental Petroleum, and how they are seen by many as at least a viable alternative to independent chairmen. Specific roles and responsibilities are noted, as is the potential for lead directors to step into broader roles.

This article is an excellent “on the ground” discussion of how lead directors can improve day to day governance and well worth your time to read.