Roles and Responsibilities
The bar has been raised for boards, their committees, and individual directors. Board deliberations are frequently focused on core questions: How can we function more effectively? What are the critical areas a board should focus on? Are we asking all the right questions and how do we maintain an oversight role without crossing the line into management?
The primary roles of the board include hiring and firing the CEO, planning for his/her succession, and overseeing the strategy set by management. Boards should also consider the following:
- Overseeing strategy and monitoring execution
- Board leadership and composition
- Executive succession and development
- Senior executive compensation issues
- Monitoring the quality of products and services
- Performance and financial viability
- Risk management, controls, and transparency
- Tone at the top, ethics, and compliance
- Stakeholder issues, including business sustainability in light of climate, energy, environmental, and other concerns.
July 25th, 2012 marked the 10th anniversary of the enactment of the Sarbanes-Oxley Act, a regulation that changed the landscape of Americas' corporate governance. Following the passage of Sarbanes-Oxley, many S&P 500 boards moved quickly to establish a lead or presiding director role. Some results provided by the 2012 Spencer Stuart Board Index, illustrate these trends: In 2002, one-quarter of S&P 500 boards separated the chairman and CEO roles, compared with 43% today. Meanwhile, 23% of S&P 500 boards in 2012 have a nonexecutive chairman who is truly independent, an increase from 13% in 2007.
Guidebooks on Director Duties
Designed for board directors and exectuives, these guidebooks provide practical information and resources about their general duties as well as their obligations as they pertain to the regulatory environment and SEC reporting.
Posted with permission from R.R. Donnelley & Sons Company, copyright 2011.
Corporate Governance Handbook: Legal Standards and Board Practices (Third Edition)
Available for purchase from The Conference Board, Inc., this edition provides directors with information on a number of corporate governance areas, with a particular focus on risk management. It includes a set of tools for boards with sample corporate governance principles, committee charters, and assessment questionnaires.