Proxy Disclosure: Split CEO and Chairman

Summary

This template may be used by an issuer to draft the board leadership disclosures required by its annual proxy statement, and assumes that a company has separated the chairman and CEO roles. Item 407(h) of Regulation S-K requires that companies make certain disclosures about their board leadership structure in their annual proxy statements. This template includes practical guidance, drafting notes, and optional clauses. Keep in mind that this template provides one possible corporate governance structure and a related disclosure. The company charter may require an independent Chairman, a lead director, both, or be silent as to the issue. The appointment process and responsibilities of each executive and board leader vary across companies and are context specific, requiring the below disclosure to be carefully tailored. Keep in mind that the disclosure must comply with Item 407(h) of Regulation S-K, and state: • Whether the board is led by the CEO or some other person • Whether the company has a combined chairman and CEO and, if so, whether the company has appointed a lead or presiding director, and what role such person serves in board leadership • The rationale for the board leadership structure and why it is the most appropriate structure for the company at the time of filing. • In addition, investment companies must make certain disclosures as to whether the chairperson is an "interested person" of the registrant as defined in section 2(a)(19) of the Investment Company Act (15 U.S.C. 80a-2(a)(19). Item 407 also requires disclosure about the board's role in risk oversight, but this is often addressed in an independent section. Listing Exchange Reporting Obligations: Additionally, if the company is listed on the New York Stock Exchange, Section 303A.03 requires that if the company has a joint Chairman/CEO, or if the Chairman is a member of management, the company must appoint a lead or presiding director to preside over meetings of the independent/non-management members of the Board of Directors. The company must also disclose certain information about the lead or presiding director in its SEC filings and/or on its website. For a full listing of related proxy statement and annual meeting content, see Proxy Statement and Annual Meeting Resource Kit. For template disclosure for a company that allows an individual to hold both the roles of chairman and CEO, see Proxy Disclosure: Combined CEO and Chairman. For more information on the ways companies allocate executive and board management responsibilities, see CEOs, Chairs and Lead Directors: Who Leads the Board?