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Executive Compensation
One of the events that gets the most attention from a company's shareholders is an increase in executive pay. Increases come at the expense of shareholder profits, although most understand that competitive pay helps to keep talent in the business. However, it is the board of directors that votes to increase executive pay. When the CEO is also the chairman, a conflict of interest arises, as the CEO is voting on his or her own compensation. Although a board is required by legislation to have some members who are independent of management, the chair can influence the activities of the board, which allows for abuse of the chair position.

Corporate Governance
One of the board's main roles is to monitor the operations of the company and to ensure that it is being run in conjunction with the mandate of the company and the will of the shareholders. As the CEO is the management position responsible for driving those operations, having a combined role results in monitoring oneself, once again opening the door for abuse of the position. A board led by an independent chair is more likely to identify and monitor areas of the company that are drifting from its mandate and to put into place corrective measures to get it back on track.

Audit Committee Independence
In 2002, the Sarbanes-Oxley Act, legislated as a response to several high-profile corporate failures, set out stronger regulations for corporate oversight, including a requirement that the audit committee consist of only external board members. This means that no member of management can sit on the audit committee. However, because the committee is a sub-group of the board of directors and reports to the chair, having the CEO in the chair role limits the effectiveness of the committee.

This is especially true for the whistleblower clause. Sarbanes-Oxley requires that the audit committee

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