There are two pillars of leadership that drive long-term shareholder value: the CEO of the company, and the leader of the board of directors. Among the most important governance issues boards are grappling with today is how far apart those pillars should stand.
Many proponents claim that separating the CEO and chairman roles will enhance board effectiveness and long-term shareholder value. Agreement has coalesced around the idea that each board must have some form of independent leader, but that role can take many shapes, including non-executive chairmen, lead directors or presiding directors.
Korn Ferry’s second Annual Survey of Board Leadership examines the performance of companies that have changed their governance structure to better understand:
- What has changed—for better or worse—from the perspective of the directors, CEO, shareholders, and leadership team?
- How do companies define the board leadership role(s) and how do they evaluate success?
- What best practices exist for selecting board leaders?
- Are there leadership characteristics that are unique to board leaders?
- How do boards with both a non-executive chairman and a lead director clearly delineate the two roles?
The results point to a continued trend toward having a board leader who is not also the CEO, though the rate of separation of the roles and reason for change vary by company size, industry and other key factors.