A fine balance: what makes an effective lead director

With the practice of naming lead directors at an all-time high, there should be a clear understanding of the characteristics that the role requires.

From its inception in the 1990s, the position of lead director has offered a middle way between boards ruled by a CEO chairman and boards chaired by a non-management director. After General Motors Corp. instituted the role of lead director in 1994, the practice slowly gained adherents. It took off in 2002 when the New York Stock Exchange required the independent directors of listed companies to meet at least once yearly without management.

The practice got an additional boost in 2004 when a blue-ribbon commission of the National Association of Corporate Directors (NACD) recommended that "where the chair and CEO roles are not separated ... there should be a designated leadership role for an independent director to serve as a focal point for the work of all the independent directors, with clarity of role and continuity of who performs that role."

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