While the pundits are declaring that the recession is over and the financial crisis has been abated, part of the aftermath is the continuing demand for corporate governance reforms by Congress, the SEC and activist investors in response to the perception that governance failures led to, or at least failed to mitigate, the crisis.
There has been no shortage of proposed legislation, regulation and other sources of pressure designed to enhance accountability for boards of directors. An area being discussed as an important step in changing governance is for all companies to split the combined roles of the CEO and chairman of the board, and instead appoint independent board chairmen to lead boards.
The movement gained momentum from the majority support that a precatory shareholder proposal received at Washington Mutual last year. It was further inspired when the Millstein Center for Corporate Governance and Performance at Yale begin advocating for the widespread adoption of independent board chairs as the right board leadership structure.1 The movement reached a crescendo when Ken Lewis lost his board chairmanship as a result of a binding shareholder proposal at Bank of America’s annual meeting of shareholders in April.
