Nuban Institute

Corporate Governance Tips for a Strong Board

Your board should adhere to the highest standards in corporate governance. However, it’s not enough to simply check the right boxes and follow the minimum regulations. A good board must continuously evaluate its own performance in order to discover ways to improve. The best boards are ones that excel in this field.

A good practice in governance is to ensure that shareholders understand the roles, responsibilities of the board and accountability. This includes describing the aligning of the board’s compensation with the company’s goals and defining what constitutes a successful system of supervision and checks and balances.

Another crucial aspect is to have a clear plan to manage risks for the company. This means developing a knowledge of the company’s short and long-term risk profiles and working together to define the way in which the board will assess the risks. It is also about making sure that the management and the board have the tools to assess risks, including internal factors such as cultural norms, or insufficient communication between directors.

The ability to listen to shareholder concerns is also important. Encourage participation. This is particularly important in the current climate of increasing shareholder activism. Boards, for instance engage with shareholders in order to find and resolve shareholder discontent long before the start of the proxy season.

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