By ADEYEMI Bisi
MON, 22 AUGUST 2016-The Chairman of the Board is Primus Inter Pares (the first among equals or first among peers)on the Board of Directors of every company and typically elected by members of the Board of Directors who also determine the period for which she is to hold office. In some jurisdictions, the Chairman of the Board is elected annually by members of the Board at the first Board meeting, after each Annual General Meeting or between Annual General Meetings upon the resignation, death, disqualification or removal of an incumbent Chairman. The Chairman should be a non-executive director and it is desirable that she should satisfy any independence standards set by the Board, applicable law or relevant Corporate Governance Code and best practice.
The return of the former CEOs of two Nigerian Banks as Chairmen of the respective Banks, raises the question of independence and overbearing influence – particularly in the context of them being substantial shareholders. To neutralize their influence in the interest of all stakeholders, it is recommended that additional Independent Directors (who pass the test in every material respect) be appointed on the Board of these institutions. It is also suggested that the role of the Senior Independent Director as proposed by the draft Financial Reporting Council (FRC) Code of Corporate Governance (aka the National Code) could checkmate a “Super Chairman”.
Selecting a Board Chair is a very important process in the life of any company. Most organizations adopt the democratic approach spelt out in the Companies and Allied Matters Act by voting for one of them to serve as Chair. In appointing a Chairman, it is important to ensure that the individual possesses a good understanding of the company’s business to be able to properly conduct Board meetings and provide oversight. The Chairman must also be a unifying presence with the ability to guide the Board to a consensus in decision making. An effective Chairman should have a good working relationship with the CEO, and enjoy the respect of other Board members. The effectiveness of a Board is dependent largely on the Chairman’s industry knowledge, leadership skills and influence on Board processes.
The Board Chair is expected to have extensive business leadership experience, including crisis leadership, be collaborative and retrained in style, resilient, possess complete candor and have an expectation of same in others. She is expected to downplay self-interest, serve as a trusted counselor and partner of the CEO and display a passion for good corporate governance. The Board Chair should also be able to listen well and get Directors to express underlying concerns.
The Chairman is accountable to and serves at the pleasure of the Board. She provides overall leadership and direction to the Board and the Company; sets the strategic and annual Board plan; chairs Board and General meetings; communicates with shareholders and core investors. The Chairman also oversees Director Nomination, appointment, development and performance evaluation. In this regard, the Chairman should be able to ensure that there are no dysfunctional Directors on the Board and that all Directors are active and given the opportunity to bring their respective leadership experience to the Board.
Although the Chairman acts as a direct liaison between the Board and Management through the CEO, he should possess the skills to carry out the function of providing proper oversight and guidance without micro-managing or getting involved in the day-to-day operations of the company. The concept of the separation of the role of the Chairman from that of the CEO implies that the Chairman should be independent of Management and free from any business interest or other relationships which could interfere with his ability to make independent judgment.
To be an effective leader, the Chairman must be trusted and respected by the other members of the Board and by Management as well as shareholders. To gain the trust of his peers, the Chairman should be fair, open minded and encourage Board members to voice their views without compromising the need to run meetings efficiently. The Board Chair should have influence, corporate diplomacy and constructive guidance. Suffice it to say that the effectiveness of a Board of Directors is severely limited if meetings are conducted by the Chairman in a way that stifles expression of divergent views.
Above all, the Chairman must be a person of integrity, uphold high ethical values and expect same from all Directors. The Board Chair “should be comfortable in own skin and station in life” (“Boards That Lead”, Carey, Charan & U seem) and have the strength of character to truly be the first among equals.
ADEYEMI, Bisi is the Managing Director DCSL Corporate Services Limited. Email:badeyemi@dcsl.com.ng|www.dcsl.com.ng
