Archives: Board of Directors

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Board Engagement: The Ethics and Compliance Missing Link

It’s been a year since I wrote about The Board’s Overlooked Role in Compliance. At the time, it seemed that momentum was building for more proactive board engagement in establishing and overseeing compliance programs. After all, regulators and courts have been increasingly outspoken about the importance of effective compliance programs and pointed about the essential … Continue Reading

The NYC Comptroller and Pension Funds Boardroom Accountability Project 2.0

Board composition is increasingly at the forefront of governance activists’ focus and initiatives. A recent, high-profile example of this comes from New York City Comptroller Scott M. Stringer and the New York City Pension Funds via their Boardroom Accountability Project 2.0. This initiative builds on their 2014 initiative and, according to their press release, is … Continue Reading

The Quiet Demise of Director Meeting Fees

As director duties have become increasingly burdensome and complex, companies have responded with variations on, and additions to, the traditional fee arrangements. It is now common to see equity awards of various descriptions, deferred fee arrangements, fee differentials between committees and between regular members and chairpersons, and minimum stock ownership requirements, just to name a … Continue Reading

Mixed Enforcement Messages (and What's in a Name?)

Not long ago I wrote about a speech by Andrew Ceresney, Director of the SEC’s Division of Enforcement, at the Directors Forum 2016 in San Diego. In his speech, Mr. Ceresney made a point of noting the SEC’s continuing commitment to pursue “gatekeepers” who fail to comply with their legal and professional obligations. (See this … Continue Reading

Beefing Up Director Compensation Disclosures

With calendar year companies currently in the midst of drafting their proxy statements, it is time to consider the often overlooked director compensation disclosures. Changes in director compensation arrangements. Director compensation continues to increase in amount and complexity as companies strive to keep up with directors’ increasingly burdensome duties. For example, boards are now taking … Continue Reading

Overboarding–How Many Directorships are Too Many?

Every so often, the issue of “overboarding”—meaning directors serving on too many boards—pops up in the news or in corporate governance circles. On January 21st, a Wall Street Journal article by Joann S. Lublin entitled How Many Board Seats Make Sense? once again highlights that concern. As Ms. Lublin points out, pressure to reduce the … Continue Reading

Addressing Cybersecurity in Board Committee Charters

As boards of directors have become more focused on their fiduciary duties to oversee cybersecurity, new governance practices have begun to develop. For example, many companies have shifted cybersecurity oversight from the audit committee, which has more than enough other responsibilities, to the full board or to a risk oversight committee formed for that purpose. … Continue Reading

What is a Public Benefit Corporation Anyway?

Kickstarter, the well-known crowdfunding website, recently made news by announcing that it has become a Delaware “public benefit corporation” under that state’s new (2013) PBC statute. For example, a New York Times headline on September 21st declared that “Kickstarter Focuses Its Mission on Altruism Over Profit,” which certainly sounds impressive. The Times article went on … Continue Reading

Good News for Compensation Committees

With executive compensation under fire from seemingly all directions these days, it’s nice to get some good news occasionally. In this case, that news comes via the Delaware Chancery Court’s recent decision in Friedman v. Dolan, which confirmed the application of the business judgment rule (rather than the “entire fairness” standard) to the actions of … Continue Reading

The SEC Considers Updating Audit Committee Disclosures

The SEC recently published a concept release seeking comment on the need for new audit committee disclosures. This follows on the heels of recent PCAOB pronouncements and proposals regarding audit engagement partner disclosures in a new form to be filed with the SEC. (See this Doug’s Note.) The SEC staff noted that the majority of … Continue Reading

Expanded Audit Committee Responsibilities–New Auditing Standard No. 18

Last October, with relatively little fanfare, new PCAOB Auditing Standard No. 18 expanded Audit Committee oversight responsibilities. (See this Doug’s Note.) AS 18, which became effective for fiscal years beginning on or after December 15, 2014, focuses on three categories of transactions and relationships that, in the PCAOB’s view, provide increased risk of material financial … Continue Reading

Using Board Executive Sessions to Manage Enterprise Risk

Boards of directors are now thoroughly immersed in enterprise risk management, so much so that separate risk oversight board committees are fast becoming common practice. (See this Doug’s Note.) Boards and management continue, however, to work out the logistics of their respective roles and how best to coordinate their risk-related efforts. Certainly careful board/management coordination … Continue Reading

Forum Selection Bylaws–More Good News

Fending off merger-related shareholder lawsuits keeps getting easier. Just a week ago, the Delaware Chancery Court upheld the enforceability of the bylaw of a Delaware corporation headquartered in North Carolina that selected North Carolina courts as its exclusive shareholder litigation forum. As a result, the court dismissed the merger-related shareholder lawsuit in question. A summary … Continue Reading

Considering a Director Emeritus

Board composition has been a governance focus for a while. In addition, recent pronouncements by ISS and The Council of Institutional Investors have expressed concerns about the impact of lengthy tenures on director independence, which could heighten that focus. In recent years, many companies have reconfigured their boards to better align with evolving regulatory and shareholder … Continue Reading

Creative Shareholder Engagement–Director Videos?

Much has been written lately about the importance of shareholder engagement. (See this Doug’s Note, for example.) There has even been recent clambering to involve directors directly in shareholder engagement. I am skeptical of direct shareholder-director engagement for reasons explained in this Doug’s Note. Microsoft, however, has been implementing a creative, middle-ground approach to this … Continue Reading

Shareholder-Director Engagement–The Latest Governance Trend?

A few weeks ago several large institutional investors identified as the Shareholder-Director Exchange (SDX) Working Group sent a letter to the lead directors and corporate secretaries of Russell 1000 companies asking them to consider shareholder-director engagement as an enhancement to their corporate governance. The financial media and other commentators have picked up the theme and … Continue Reading

Weak Succession Planning Remains a Problem

Back in January, I wrote that “few things are more important to a company’s success than identifying, hiring and retaining an effective CEO,” and yet many boards of directors pay scant attention to succession planning. (See this SCGG Article.) Now Stanford’s Rock Center for Corporate Governance and the Institute for Executive Development have issued their … Continue Reading

Risk Oversight Committees–An Idea Whose Time Has Come

Earlier this year I wrote that directors have become much more educated in recent years about enterprise (not just financial) risk management and about their fiduciary responsibility to oversee ERM effectiveness. (See this Doug’s Note.) Directors are asking management to answer specific, substantive questions about how the company’s ERM functions and how they can (or … Continue Reading

Shareholder Engagement and Governance Road Shows

Most observers agree that the influence of shareholder advisory services (SASs), primarily ISS and Glass Lewis, is waning after years of exerting near Jedi mind control over their institutional shareholder subscribers. As companies have become more sophisticated and proactive in addressing SAS hot buttons through better proxy disclosures and key shareholder engagement, institutional shareholders have … Continue Reading

Director Training and the J. C. Penney Saga

I’ve watched with interest as the J. C. Penney board of directors soap opera has played out in the media over the past few days. Maybe you have, too. (Here’s today’s New York Times account.) In addition to entertaining you, this saga hopefully also made you thankful that your board is not that dysfunctional.… Continue Reading