Recently, the NYSE and JPMorgan released this lengthy “Board Structure and Composition” white paper and Cooley was proud to contribute Chapter 20 “Independent Board Chair – Trends and Issues” chapter (pp. 157–163). Here are seven practice pointers from that:
1. Clarify the Role of the Chair: Define and document the independent chair’s duties in a committee charter, governance guidelines, or board policy to avoid confusion with the CEO’s responsibilities. A clear role helps support effective board leadership.
2. Tailor Fit Over Trend: Don’t adopt an independent chair structure just because it’s trendy or favored by governance advisors. Ensure it fits the company’s unique culture, board dynamics, and leadership needs.
3. Don’t Default—Debate: Periodically revisit the board leadership structure as part of governance reviews or succession planning. Even if the structure seems to be working, regular evaluation ensures continued alignment with the company’s evolving needs.
4. Lean on Lead Directors—Strategically: If you’re sticking with a combined CEO/chair role, bolster board independence by empowering the lead independent director. This includes responsibilities like setting agendas and leading executive sessions.
5. Manage Transitions Smoothly: If shifting to an independent chair structure, plan ahead. Consider timing (e.g., during a CEO succession), manage internal and external messaging, and support the incoming chair for a smooth transition.
6. Set Up the Independent Chair for Success: Set the independent chair up for success with access to management, sufficient prep time for meetings, and clear authority to act as a liaison between the board and the CEO.
7. Communicate Governance Rationale: When disclosing the board’s leadership structure in proxy materials, explain the “why” behind the structure chosen. Transparency builds investor trust—even if you diverge from common governance preferences.
Authored by
Broc Romanek