Board Gatekeepers

For the last decade, investors, scholars and regulators have turned to independent directors in key leadership positions as a means to safeguard corporate boards' ability to serve as a robust check on management's power. As a result, a vast majority of public companies' boards are now led by an Independent Chair, or alternatively, include a Lead Independent Director. These ostensible outsiders"which this article calls "board gatekeepers""are meant to be even more empowered and detached from management compared to the rest of the board. This allows them to serve an independent gatekeeping function"a necessary guardrail against management's ability to exert undue control over the boardroom. But a closer look at board gatekeepers paints a concerning reality. Through a hand-collected dataset and interviews with directors and general counsels, this Article reveals, for the first time, that installing board gatekeepers is not the cure-all it seems. Instead, board gatekeepers are often deprived of the powers necessary to rebalance the boardroom dynamic and, in many cases, their own independence is questionable at best"and recognizing them as such has numerous theoretical and practical implications. This Article makes two key contributions to the literature. First, using a first of its kind, hand-collected and coded, dataset of 900 public companies, it exposes the unfettered discretion companies have in designating gatekeepers' independence and powers"revealing that many board gatekeepers are in fact gatekeepers in title only, lacking both the independence and powers that are critical to their role. Second, the Article uses the context of board gatekeepers to illuminate the inherent difficulty with relying on an abstract concept of independence, underscoring the importance of what it terms as "functional independence." Recognizing that companies with faux gatekeepers may pose specific governance concerns, the Article then offers several policy recommendations to ensure gatekeepers' functional independence