In a time of increasing regulatory risk, global complexity and shareholder activism, the role of the corporate general counsel in the boardroom has never been more important. Yet, companies have been slow to recruit general counsel or seasoned attorneys to serve as independent directors. Among the nearly 3,900 independent directors of publicly traded Fortune 500 companies just 5.1% are or have been general counsel.
Why such low representation? Some of it is based on questionable logic. “We already have a GC in the room,” goes one argument. “We don’t need another one.” Of course, most boards already have the benefit of the perspective of the company’s CFO in the boardroom, but that does not deter them from recruiting outside CFOs to serve as independent directors. In fact, CFOs and former CFOs account for 16.5 percent of independent board seats among the Fortune 500. Though some of the relative over-representation of CFOs compared with GCs can be attributed to the Sarbanes-Oxley requirement that a Board’s audit committee include at least one “financial expert,” the unique experience and insight of a GC clearly is undervalued when boards consider new candidates.
The Role of the GC
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