Boards of directors should select and decide compensation of general counsel (!)

E. Norman Veasey and Christine T. Di Guglielmo, in “The Tensions, Stresses, and Professional Responsibilities of the Lawyer for the Corporation,” Bus. Lawyer, Vol. 62, Nov. 2006 at 1, recommend (at 13) that “the Board of Directors should have approval responsibility for selecting, retaining, and compensating the general counsel.” The term “approval responsibility” quivers with ambiguity, but the gist of the sentence seems to be that the Board should have more decision-making power regarding a new general counsel than should the CEO.

I have always thought that it is the prerogative of the CEO to select the chief lawyer for the company, albeit with input from the Board of Directors.

But Veasey, the former Chief Justice of the Delaware Supreme Court, and Di Guglielmo, an associate at Veasey’s current law firm, would give to the board the knighting sword: “By providing a buffer between the general counsel and the CEO, this will serve to reduce pressure on General Counsel to accede to questionable management plans.” Why not extend that power to CFO’s? Or to Chief Compliance Officers? I’m out of my depth here, but it’s hard to imagine CEOs relying as completely on the top lawyer as they often do if the Board picks and pays those lawyers (See my post of Aug. 28, 2005 on the role of consigliore.).