In response to the crisis of US corporate governance, directors are beginning to demand change. McKinsey surveyed 200 of them sitting on some 500 boards and found support for making these bodies more independent of management and for more awareness by directors of the challenges and risks facing their companies. The authors present a seven-part board governance reform program intended to make boards more independent and to strike a balance between their oversight role in representing shareholder interests and management's power to run companies effectively. The recommendations include either splitting the roles of the CEO and the chairman or appointing a strong independent lead director.
The take-away
Boards can help restore investor confidence in the integrity of US capitalism if they pursue reforms that give them greater independence from, and oversight of, top management.
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