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Instead of separating the offices of chairman and CEO, some companies adopt a compromise of sorts: appointing an independent lead director. The concept has been around at least since 1993, when General Motors Corporation adopted its famous “GM Guidelines,” which popularized the idea, says Paul Lapides, director of the corporate governance center at Kennesaw State University in Kennesaw, Georgia. Companies often go the lead director route because it can prove difficult to recruit chief executives without being able to offer them both the CEO and chairman positions. Even after highly publicized governance fiascos at Tyco International Ltd. and WorldCom, Inc. (now MCI), the embattled companies weren’t able to split the top jobs when looking for replacements for their ousted former chiefs. Both companies instead opted for a lead director position. Proposed changes at the New York Stock Exchange and Nasdaq, Inc., will likely encourage the switch at more companies. New rules would require companies to hold regular meetings of independent directors and to appoint a person to run the meetings, probably a lead director. Some companies have already started to make the change. In August, NetIQ Corporation, a $300 million Internet security company based in San Jose, appointed board member David Barram as lead independent director. Charles Boesenberg remains the company’s CEO and chairman. According to NetIQ general counsel Betsy Bayha, the company acted in part because of the impending Nasdaq changes, but also because the move made sense for the business. Most important, says Bayha, was improving information flow between management and the board. “We felt it was appropriate to identify an individual to better facilitate communication, an independent individual who wouldn’t necessarily filter [issues] with the senior management view,” she says. Bayha says that she can already see the difference in the way the company operates: “As general counsel, I take great comfort in knowing that I have someone I can have candid discussions with.”

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