Companies Boost Pay for Board Leaders
The Agenda article, “Companies Boost Pay for Board Leaders," quoted Russell Reynolds Associates Consultant Anthony Goodman on how the roles of board chair and lead director are similar, but also how they differ. The article is excerpted below.
Boards are granting compensation increases to non-executive chairs and lead directors as both roles grow increasingly more complex and, more broadly, as governance processes and board quality take center stage with investors.
Anthony Goodman, a senior member of the Russell Reynolds Associates (RRA) board and CEO practice, points out that while the lead director role has a growing set of responsibilities, the board chair role is consistently considered a more high-profile and more complicated job. Still, many facets of both roles are similar. For instance, 57% of lead directors also chair another board committee, while 30% of independent chairs also serve as a separate committee chair, according to RRA data. However, both lead directors and board chairs often attend all committee meetings. Many lead directors work closely with company CEOs to set meeting agendas, in the same way board chairs set the meeting agenda. By the same token, however, board chairs actually chair the meeting while lead directors chair sessions of the independent directors, says Goodman.
Still, as boards hone their governance processes and take a greater role in helping management teams set strategy, the lead director and independent chair are important to ensuring board priorities are aligned and that board processes are meaningful, Goodman says.
Russell Reynolds’ data shows that among lead directors who chair a separate committee, 63% chair the nominating and governance committee. Among board chairs who serve as a committee leader, 69% chair the nom-gov committee. That similarity, says Goodman, is due to the convergence of all three roles in having a critical hand in the overall functioning of the board.
“For instance, many board leaders would be involved in the board search process. They would be involved in or leading the board self-evaluation or maybe director self-evaluation if they’re doing that on the board. They may have a role in meeting with investors and trying to deal with shareholder proposals and so on,” says Goodman. “All of those things are the meat and drink of the nominating and governance committee. So, you can see that for the sake of efficiency, combining those roles would make a lot of sense.”
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