ACC is advocating to increase the percentage of companies employing the best practice of having the general counsel be a direct report to the CEO and a regular attendee at board meetings.
ACC is advocating to increase the percentage of companies employing the best practice of having the general counsel be a direct report to the CEO and a regular attendee at board meetings.
ACC research indicates that only 70 percent of public company general counsel have a direct reporting relationship to the CEO, and the percentage is even lower for private companies. Our mission is for 100 percent of general counsel to report directly to the CEO as a member of the executive management team, and for 100 percent of general counsel to have a seat at every meeting of the board of directors.
Having the general counsel as a direct report to the CEO ensures that the general counsel is at the executive table when business strategy is being formed, confirming that legal risk and compliance perspectives are reflected in that strategy. The general counsel is uniquely suited to guide the company in these important areas, as other c-suite executives lack the legal expertise needed to proactively and holistically address these challenges. Additionally, the general counsel is the board's natural ally in maintaining appropriate risk and compliance controls, but that requires a consistent relationship with the board of directors. Data suggests that these best practices have not been universally adapted by companies. ACC believes that the absence of the GC's voice works against the best interest of investors, as legal and compliance risks are too significant to sideline.
ACC is advocating aggressively to make the proper role and positioning of the general counsel a wider topic of discussion. We encourage boards, institutional investors, CEOs, regulators, and the judiciary to support this as a matter of corporate governance and sending the right "tone from the top" message regarding corporate culture. See Our Work
Whether you serve in the C-Suite of your company or you are General Counsel, you have a role in seeing ACC's Seat at the Table mission through.
If the general counsel of the company on whose board you sit is not a direct report to the CEO, you should consider this a red flag and require the CEO to justify this decision. If the general counsel is not a regular attendee of board meetings, you should question why. If the CEO refuses to adhere to this corporate governance best practice, directors should consider whether the CEO is the proper ethical leader of the company. As recommended in the 2017 NACD Blue Ribbon Commission Report on Culture as a Corporate Asset, directors should ensure the general counsel is well-positioned within management and in relationship to the board to support an appropriate corporate culture.
Be aware of whether the companies you are invested in have a well-positioned general counsel who reports directly to the CEO and regularly attends board meetings. If this is not the case, you should be vocal about the company's failure to adhere to this best practice, and if necessary, vote for directors who will insist that this best practice is followed.
Include the general counsel as a direct report and member of the executive team. You should also ensure that the general counsel is a consistent presence in the boardroom. If the person currently holding the general counsel role is not a good fit for the demands of such an elevated role, consider replacing the general counsel rather than downgrading this essential position to one that does not report directly to the CEO.
Involve the general counsel proactively in relevant business issues and leverage their legal background to address risks, compliance, and culture.
Issue guidance that encourages companies to employ the best practice of direct-to-CEO reporting for general counsel. Encourage boards to ensure they have a healthy relationship with their company's general counsel.