Leader of the Pack: A Proposal for Disclosure of Board Leadership Structure

To reform corporate governance, this article proposes that the New York Stock Exchange and the National Association of Securities Dealers amend their listing policies to require a listed company to disclose in its proxy statement (1) whether or not there is a separate independent chair of its board of directors, and if there is not, (2) whether or not its board of directors has designated a senior independent director who functions as a leader of its independent directors. The proposals are designed to encourage directors to select an independent chair or a lead director, thereby increasing the likelihood that a company's independent directors will not be beholden to a CEO. The authors survey management under-performance in publicly traded U.S. companies and the practical effects of implementing their proposal to show the benefits to shareholders from independent directors.