When the nonexec chair is the lead director: five top tasks, as seen by a turnaround specialist.

AuthorDean, Craig S.
PositionDUTIES OF DIRECTORS

In recent times it has become fashionable for boards to designate a "lead" director, who may (but not always) be the nonexecutive chairman. High-profile scandals have placed the spotlight on dysfunctional board oversight. From our perspective as turnaround managers, the need for the lead director looms large. We often are called into situations in which boards have watched the CEO march a company into trouble, in good part because the board dynamic did not provide an effective means to address individual members' concerns.

At its core, the role of the lead director is to help ensure an engaged board and create an atmosphere for a frank and honest dialogue with management. As a peer, the position calls for an individual who can lead by building consensus among the board and the CEO. Historically a lead director often has surfaced only when a company was facing a crisis, but we see five critical tasks for the lead director no matter what position the company is in:

* Setting the Board Agenda: Board meetings should provide directors with access to solid information for effective decision making as well as a platform for constructively challenging management's strategy. By setting the agenda, the lead director can ensure that the proper issues are addressed, that in-depth information is presented by management, and that there is plenty of opportunity for open debate. The time-honored tradition of management "show and tell" in the boardroom simply doesn't cut it.

* Serving as Liaison Between the Board and the CEO: The lead director should serve as an objective conduit for board members to express concerns and issues. To accomplish this, the lead director acts both formally and informally, such as by chairing periodic independent director meetings or conducting regular offline discussions with directors and with the CEO. Beyond the board, the lead director also can serve as the focal point when key stakeholders, such as major shareholders or lenders, need to air concerns about the CEO or the direction of the company.

* Ensuring Governance Best Practices: Much has been written on this topic, but it is a critical component of the lead director's role to make sure that board...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT