The Nominating Committee Process: A Qualitative Examination of Board Independence and Formalization Richard Clune, Dana R. Hermanson, James G. Tompkins and Zhongxia (Shelly) Ye
Contemporary Accounting Research, Vol. 31, Issue 3 (June) 2014, pp. 748-786
Overview
The nominating committee (NC) of the board of directors identifies and nominates individuals for board service, thus establishing the board’s membership. Despite this important role, relatively little is known about how NCs search for new directors. Based on interviews of 20 U.S. public company NC members, we focus on two primary questions: (1) how much influence does the Chief Executive Officer (CEO) have over director searches; and (2) how formal are director searches? We find that CEO influence in the director nomination process varies widely, from little CEO influence to near total control by the CEO. Also, there is considerable variability in the formalization of the director nomination process. Finally, we find that many interviewees have professional or personal ties to the CEO and that nearly all of the NCs focus on “chemistry” and comfort in the director nomination process, where the often-stated goal is to enhance the board’s ability to function effectively and to reduce risk.
4 | Outstanding Publication
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