All directors share the responsibility of helping a board resolve challenging board issues. Lead directors, however, frequently guide the board through critical situations. Although there are many different issues that a board may encounter that are well suited for a lead director’s involvement, a lead director often plays a key role in resolving the following four challenges: (1) handling individual director performance issues, (2) responding to an underperforming CEO, (3) bringing new directors on board, and (4) preparing for lead director succession.

The Lead Director Network (the “LDN”), a group of lead directors, presiding directors and non-executive chairmen from many of America’s leading companies, met on November 1, 2011 to discuss their role as lead directors in these and other challenges. Following this meeting, King & Spalding and Tapestry Networks have published a ViewPoints report here to present highlights of the discussion that occurred at the meeting and to stimulate further consideration of these subjects.

The following provides highlights from the LDN meeting, as described in the ViewPoints report.

…continue reading: Challenges in Board Leadership

The past year has been one of change and challenge for public companies and their boards, as companies have moved to implement “say-on-pay” and other provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). With the 2012 proxy season on the horizon, public companies and their directors will continue to feel the impact of Dodd-Frank as the Securities and Exchange Commission (“SEC”) proceeds with its ongoing efforts to implement the law. At the same time, public companies and their boards are operating in an environment where the balance of power between boards and shareholders continues to shift. The traditional, board-centric model of corporate governance continues to gravitate toward a paradigm that includes an increased role for shareholders. Activist shareholders are seeking greater participation in companies’ governance and operations, and they are exerting increased pressure on companies to adopt so-called corporate governance “best practices.”

…continue reading: Considerations for Public Company Directors in the 2012 Proxy Season

As we approach the end of the year, it is time to start thinking about the hot button issues that will face boards and senior management – and that may show up in proxy statements – in 2012. Here are my top ten broken out by four categories:

A. Executive Compensation/Say on Pay

1. Responding to your SOP vote – Compensation committees should prepare with a similar level of intensity as last year. Many institutional investors, like ISS, usually revise their voting guidelines annually and could make changes that negatively impact on how they view your compensation program;

2. Problematic Pay Practices – Boards should seriously consider last year’s SOP votes as a wake-up call for compensation committees that have failed to remove or end practices that both proxy advisory firms and large shareholders have deemed problematic;

3. Say-On-Pay Engagement – Compensation committees should be asking, especially those at firms that either lost or sustained their SOP vote by narrow margins, how best to reach out and engage their shareholders on these issues. The compensation committee and senior management should be prepared to consult with advisors before reaching out.

…continue reading: Top Ten Issues For Boards in 2012

The economic crisis, increased rules and regulations, and heightened scrutiny of boards’ roles have corporate directors feeling pressure to be more effective in the boardroom. PwC’s 2011 Annual Corporate Director Survey (the Survey) of 834 corporate directors offers insight into the biggest corporate governance issues facing directors today. Because 67% of respondents represent companies with more than $1 billion in annual revenue, the Survey illustrates the current boardroom thinking of many of the largest companies in the world.

The corporate governance landscape has changed over the past few years, and as it continues to evolve, directors are working to adapt. Their responses to the Survey indicate that executive compensation, risk management, strategy and succession planning are key areas of future focus. They are also concerned about information technology security and fraud.

…continue reading: Boards Respond to Stakeholder Concerns

The Conference Board, NASDAQ OMX and NYSE Euronext jointly released The 2011 U.S. Director Compensation and Board Practices Report, a benchmarking tool with more than 120 corporate governance data points searchable by company size (measurable by revenue and asset value) and industrial sectors.

The report is based on a survey of public companies registered with the U.S. Securities and Exchange Commission. The Harvard Law School Forum on Corporate Governance and Financial Regulation, Stanford University’s Rock Center for Corporate Governance, the National Investor Relations Institute (NIRI) and the Shareholder Forum also endorsed the survey by distributing it to their members and readers.

The Conference Board’s annual benchmark series on director compensation was first released in 1939. In the last decade, the database has been expanded to report on a wide array of governance practices, documenting a steady transformation in the role of public companies’ boards and underscoring the increasing importance of directors’ monitoring responsibilities and the growing influence of shareholders.

The following are the major findings from the 2011 edition of the study.

…continue reading: The 2011 U.S. Director Compensation and Board Practices Report

Good corporate governance is of the moment. It is talked and written about constantly by academics, the corporate governance community working for institutional investors and proxy advisors, boards of directors, corporate executives, corporate lawyers, judges, reporters and, yes, even politicians. Indeed, it is talked about and written about so often and at such length that it often seems to tower above all other aspects of the corporate world. The discourse, moreover, has come to resemble something of a Tower of Babel, where so much is said, from so many points of view, that it seems impossible to make sense of it all.

This essay attempts to bring some coherence to the topic by positing a 12-Step Program that we believe would lead to a useful and effective paradigm for truly good corporate governance.

…continue reading: A 12-Step Program to Truly Good Corporate Governance

For a number of years, as the new year approached, I have prepared a one-page list of the key issues for boards of directors that are newly emerging or will be especially important in the coming year.  Each year, the legal rules and aspirational best practices for corporate governance matters, as well as the demands of activist shareholders seeking to influence boards of directors, have increased.  Earlier this year, in The Spotlight on Boards, I published a list of the roles and responsibilities that boards today are expected to fulfill.  Looking forward to 2011, it is clear that in addition to satisfying these expectations, the key issues that boards will need to address include:

…continue reading: Key Issues for Directors in 2011

Without question, the role of public company boards and their corporate governance policies and practices continue to face intense scrutiny. That much of this scrutiny comes from shareholder activists and institutional investors comes as no surprise. Demands from these shareholders for greater “shareholder democracy” and involvement in corporate governance have been growing in line with the remarkable increases in the size of institutional investors’ portfolios over recent decades. Pressures brought by investors on corporate governance practices and policies have become even more acute in the last three years.

…continue reading: Corporate Governance of the 100 Largest US Public Companies

The business community faces a crisis in confidence both in its own ranks and in the broader society. Many are asking: how can corporations govern themselves more effectively – and truly be held accountable?

One answer is increased public regulation. The origins of the Great Recession include bad business decision-making caused in no small part by excessive and poorly structured corporate compensation. Not surprisingly, there are now energetic public policy debates about the governance both of the financial sector (a variety of measures are being considered to ensure safety and soundness) and of all publicly held corporations (with focus on an enhanced shareholder role and mandated compensation and risk processes.

Six Essential Tasks

But, regardless of regulatory outcomes, boards of directors and business leaders will still have to make complex decisions that direct the destiny of corporations. In doing so, they must, in my view, discharge six essential, interrelated tasks which are the foundation for rebuilding trust in corporate governance and addressing the ultimate questions of corporate accountability which underlie the governance debates.

…continue reading: Restoring Trust in Corporate Governance

For some years now, corporate governance experts have debated the best model of board leadership for public companies.  Studies have compared the historically prevailing U.S. model – in which the chief executive officer also serves as chairman of the board — with different approaches that are more common in other countries, such as the typical approach in many European markets of having an independent board chair.  As U.S. public companies were caught off guard by the depth and severity of the most recent financial crisis, what seemed before to be primarily an academic subject became very real for U.S. public companies.  Some observers suggested that the U.S. board leadership model (and specifically the failure of U.S. regulators to require an independent board chair) contributed to the crisis and to the failure of U.S. public companies to be prepared for the effects of the crisis. Legislators and regulators picked up on this theme, with suggestions that public companies should be required to have an independent board chair.

In the years between Sarbanes-Oxley and the 2008/2009 financial crisis, many boards realized that there were alternatives to having an independent board chair.  For example, many companies continue to have a combined CEO/chairman, but have appointed a “lead” or “presiding” director.  Even where there is no director holding such a title, many boards have called on particular directors (for example, the chair of the audit committee or the chair of the governance committee) to take leadership roles, on behalf of the independent directors.  Moreover, with the tumult in some board rooms and executive suites arising out of the most recent financial crisis, boards in certain instances have chosen, in response to their specific circumstances, to go the route of having an independent board chair, at least until the crisis passes.  Accordingly, as we enter 2010, it is no longer appropriate to say that there is one “prevailing” model of board leadership for U.S. public companies.  Rather, boards increasingly are choosing their leadership models based on their specific circumstances, such as the talent and experience of the chief executive officer, the challenges that the company is facing, and the preferences of their large shareholders.

…continue reading: Drafting Disclosure Relating to Board Leadership and Risk Oversight