In the years since the passage of Sarbanes-Oxley and the adoption of revised listing standards by the stock exchanges, most U.S. public companies have appointed one of their directors to serve as a "lead" or "presiding" director, while some boards have appointed an independent director to serve as non-executive chairman of the board. The responsibilities of these positions vary significantly from company to company, ranging from seemingly routine administrative functions to roles that can profoundly affect corporate strategy and operations. Looking beyond the formal duties of the new board leaders, experience shows that some lead directors have assumed wide-ranging and important roles within their companies.
Thought leadership created in LDN meetings is captured and published to a wider audience in ViewPoints, a report that is issued following each LDN meeting. The ViewPoints issues cover the following topics:
Issue 1 (July 2008), The role and value of the lead director - Members of the LDN met in New York for the network's inaugural meeting. Members discussed the origins and value of the lead director role, including how the role has evolved over recent years. The conversation also covered a broad number of key issues confronting lead directors, with members agreeing that a deeper exploration would occur at future meetings of the LDN.
Issue 2 (November 2008), The board's role in corporate strategy - Members discussed the role of the board in the development and oversight of corporate strategy. Members considered how the board's input into strategy has shifted from a model based on annual reviews, to a model that relies on ongoing reports and inputs, and they noted that the current crisis in the financial markets has accelerated this trend. The members also suggested some actions that lead directors can take to ensure that their boards are working collaboratively and effectively on corporate strategy.
Issue 3 (March 2009), Responding to the changing regulatory and legislative environments - At a meeting held in Washington, D.C., members met with Senator Evan Bayh (D-IN), a member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, for a discussion of how corporate directors might interpret and respond to today's changing legislative and regulatory environments. Members also discussed their top public policy concerns. Senator Sam Nunn, a member of the U.S. Senate from 1972 to 1996 and the presiding director of Dell, joined the discussion, providing his unique perspective as a senator and as a lead director.
Issue 4 (July 2009), The board's role in risk management - At the fourth meeting of the LDN, members discussed the board's role in risk management. Members noted that, in the wake of the financial crisis, public companies and their boards are changing their approaches to risk management. Directors are now focusing on broader areas of risk and involving the full board in the oversight of risk management on an ongoing basis, often using board committees to address specific or unique risks. Members also discussed recent legislative proposals related to corporate governance and considered the impact these proposals could have on boards.
Issue 5 (November 2009), The lead director’s role in succession planning - Members of the LDN met in Washington, D.C., to consider how public company boards can perform better in succession planning. During the meeting, LDN members described various approaches to succession planning, and were candid in discussing their successes and failures. They focused on the role that board leaders should take in the succession planning process. Following their discussion on succession planning, LDN members turned their attention to the corporate governance reforms pending before Congress and the SEC, and they discussed how boards can address the proposed reforms.
Issues 6 and 7 (March 2010), The lead director’s role in major transactions and in board succession planning - At the sixth meeting of the LDN, members considered two important aspects of board leadership—the lead director's role in major transactions and in board succession planning. Major transactions can be critical in a company's success or failure, and members discussed how lead directors can play a vital role in ensuring that these transactions will be successful. They focused on seven key responsibilities of lead directors in major transactions. Following their discussion on major transactions, LDN members focused on succession planning for the board and its leadership. Members considered how a board can benefit from diversity and how the board should plan for succession of its leaders.
Issue 8 (July 2010), Board leadership during investigations - Members of the LDN met in New York to discuss board leadership during special investigations. During the meeting, LDN members shared examples and key lessons learned from their own experiences with matters that required board investigation. Members also discussed the trigger events of a special investigation, the lead director’s responsibilities during a special investigation and steps a company can take to prevent events that require a special investigation. LDN members also participated in an education session related to the corporate governance reforms set forth in the Dodd-Frank Act.
Issue 9 (November 2010), Enhancing board performance - At the eighth meeting of the LDN, members discussed how to define and enhance board performance. During the meeting, LDN members considered what it means to be a “high-performing board,” the critical components necessary to enhance board performance, and how boards evaluate their own performance. Members were also joined by Dr. Ram Charan, a business adviser to many of the world’s leading companies and a New York Times best-selling author. In addition, members participated in an education session regarding the issues faced by the Hewlett-Packard board in response to allegations of harassment and expense account misrepresentations made against the company’s CEO.
Issue 10 (March 2011), The relationship between the lead director and CEO - Members of the LDN met in New York to discuss the relationship between the lead director and CEO, which is a nuanced relationship at the heart of corporate governance. LDN members focused their discussion on two broad areas: the factors that affect the CEO-lead director relationship and the impact that the lead director’s responsibilities had on the CEO-lead director relationship. Among other matters, LDN members considered how matters such as agenda setting, facilitating productive meetings and establishing the frequency and content of CEO communications affect their relationship with the CEO.
Issue 11 (August 2011), Engaging with strategy after the financial crisis - At the tenth meeting of the LDN, members reflected on board involvement with corporate strategy in the current environment. LDN members discussed four central topics: the board’s role in corporate strategy, international opportunities and risks, improving strategic oversight of international opportunities and risks, and the lead director’s role in strategy. In addition, Ambassador Susan Schwab participated in the meeting as a network guest.
Issue 12 (December 2011), Challenges in board leadership - At the 11th meeting of the LDN, members reflected on how lead directors frequently guide the board through critical situations. LDN members focused their discussion on the following four challenges: handling individual director performance issues, responding to an underperforming CEO, bringing new directors on board, and preparing for lead director succession.
Issue 13 (May 2012), Board oversight of strategic risk - At the 12th meeting of the LDN, members examined the role of the board and the lead director in overseeing strategic risks companies face. Among other matters, LDN members discussed changes in risk oversight since the financial crisis, common strategic risks companies face and emerging best practices for more expansive and imaginative risk oversight.
Issue 14 (August 2012),A dialogue with institutional investors - At the 13th meeting of the LDN, directors considered the relationship between directors and major shareholders. LDN members focused their discussion on the upswing in board-shareholder engagement, topics for board-shareholder discussion, the benefits and risks of direct engagement, and effective engagement practices. Richard Breeden, former chairman of the U.S. Securities and Exchange Commission, and CEO and chairman of Breeden Capital Management, Shawn Johnson, senior managing director and investment committee chair at State Street Global Advisors, and Gary Retelny, president of Institutional Shareholder Services (ISS), also participated in the meeting.
Issue 15 (April 2013), Planning for CEO succession - At the 14th meeting of the LDN, members discussed key aspects of CEO succession planning. Among other matters, directors discussed how boards can form a productive succession planning partnership with the CEO, steps that boards should take to ensure a successful transition process, and factors that boards should consider in emergency succession situations. Dayton Ogden, global leader of Spencer Stuart’s CEO succession advisory services practice, also participated in the meeting.
The LDN comprises independent lead directors, presiding directors, and non-executive chairmen, typically representing complex, global enterprises. LDN membership currently includes directors who serve in these capacities on the boards of the following companies: