Advisory Council Reports
NACD Lead Director Steering Committee Brief
In the Spring of 2021, NACD, alongside KPMG, brought together lead directors from Fortune 500 companies to discuss the COVID-19 pandemic’s impact on the role of the lead director.1 As parts of the world are beginning to reopen, and as others continue to struggle with novel variants of the virus, boards are reckoning with what it means to operate in a pandemic-altered world.
Participants discussed fundamental questions such as “How will the board’s operating model evolve to fit the needs of a post-pandemic world?” and “How should we change director evaluations to reflect a need for new and different skills?” While there are no definitive answers to these questions, there is no doubt that the COVID-19 pandemic will have long-term and far-reaching impacts on the f ield of corporate governance, and specifically on the position of lead director.
The Lead Director Emerges as a True Board Leader
The role of lead director has undergone a transformation as the needs of the board shifted in response to the pandemic. Boards were confronted with the need to make quick decisions under increased global scrutiny brought on by an accelerated pace of change and an unsettled geopolitical climate. Against this backdrop, lead directors had to step up and work with committee and board chairs and CEOs to establish their board’s focus and priorities.
One delegate remarked that the roles and responsibilities of lead directors have begun to resemble those of the chair: “We have a combined chair/CEO and if you look at the role I play [as lead director], it’s hard to distinguish between the two [positions].” This convergence in roles has facilitated greater collaboration between lead directors and CEOs. While it has been common in years past for lead directors to initiate engagement with CEOs, the relationship has evolved to require more proactive two-way engagement from both parties.