Yesterday, we had a two-hour session that covered a lot of ground. I am especially grateful because I’ve come to deeply appreciate the complexity of the lead director role, which often serves as a bridge between the bank’s independent board members and insider board members, like me.
Reflecting on my gratitude for this role, I found myself curious about its history. For most of my career, I was familiar with the concept of a chair of the board, I’ve worked with many until I became one myself. But the lead director? That role has a fascinating origin.
Like many aspects of governance, the lead director role emerged out of necessity, specifically, from scandal. Its rise is closely tied to the landmark U.S. corporate governance reform legislation, the Sarbanes-Oxley Act of 2002. This legislation was enacted in response to growing public distrust of management and board insiders, fueled by financial scandals involving companies like Enron Corp. and WorldCom Inc. (events many of us remember for the devastating wealth stolen from working men and women). The concept of the lead director gained traction as a way to ensure greater transparency and balance within boards.
It makes me wonder: Do we fully understand the history of the roles we now occupy? For example, when was the concept of CEO or chair of the board created?