The Head of a Leader is an item drop, always found in the loot of special 'Boss Monsters'.
As the name implies, it's the head of a fallen leader, slain by an adventurer or whoever the unfortunate leader chanced upon. Other than being a grisly trophy, the heads can be turned in to various bounty hunter NPCs and high-up officials of a city or town.
The original turn-in value of a Head of a Leader was an amount of gold and some experience points, however this was removed and currently the heads only give an amount of gold depending on the type of head retrieved. An example of this would be that a higher level area on Arelith would yield high gold Boss Heads, whilst low-level areas might offer low gold boss heads or none at all. Boss encounters are fixed in the same location and the boss monsters always drop a head upon death.