Lead Directors for Independent Boards
By Keith Kefgen
Board independence is one of today's hottest corporate topics. So much so that many institutional investors and investment advisers have included standards for Board Independence as part of their evaluation of companies for their portfolio. In addition, highly influential groups like The Conference Board, producers of the Consumer Confidence Index, have taken positions advocating measures like separating the office of Board Chairman and company CEO to promote greater Board independence.
However, this may be more easily said than done as we see in the gaming industry where 54% of the public companies still have a Chief Executive who is also Chairman of the Board. The answer to this dilemma for many companies has been the appointment of an Independent Lead Director. In fact, the Investor Responsibility Research Center published data last year that showed that 53% of Fortune 500 companies had appointed a Lead Director in 2003, compared to just 26% in 2002. I would certainly call that a trend and it made me want to see if public companies in gaming had reacted in a similar fashion.
To be specific, a Lead Director is appointed to provide independent leadership, ensure best quality governance practices and facilitate the functioning of the Board independent of Management of the company. Here are a few examples of duties and responsibilities that might be part of the Lead Directors job description.
- Review with the Chairman/Chief Executive Officer items of importance for consideration by the Board.
- Advise the Chairman as to an appropriate schedule of Board meetings to ensure that non-employee directors can perform their duties while not interfering with
- company operations.
- Assist the Chairman in the preparation of agendas for meetings.
- Recommend to the Chairman the retention of advisers and consultants who will report directly and only to the Board of Directors.
- Serve as Chairman of the Boards Governance committee. Often also Chairman of the Nominating committee.
- Call and conduct meetings of the independent directors separate from regular Board meetings.
- Mentor and counsel new members of the Board.
- Facilitate the process of Director and Chairman evaluations.
This is just a sampling of responsibility and not intended to be a comprehensive list. The needs of different boards will dictate precisely what duties the Lead Director will be charged with.
03 August 2005