Corporate Governance Tips for a Strong Board

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Your board should follow the best practices in the field of corporate governance. It’s not enough to simply check the right boxes and adhere to the minimum standards. A solid board should be continually evaluating its own performance and finding ways to improve. The best boards are ones that excel in this area.

A good governance practice is to ensure that shareholders are aware of the board’s responsibilities, roles and obligations. This includes describing how the board’s compensation aligns with the company’s strategic goals and also defining what is effective oversight and a robust system of checks and balances.

A clear plan to manage the risks of a company is also crucial. It is essential to comprehend the company’s risk profile both in the short- and long-term, as well as work together with the board on the best way to assess these risks. It is also important to ensure that the board has the tools necessary to recognize potential risks. This includes internal factors like cultural norms and lack of communication between directors.

It’s also essential to listen to concerns of shareholders and encourage participation. This is particularly important in the current context of increasing shareholder activism. For instance, boards must collaborate with shareholders in order to find and address the issues of shareholder discontent well before the time for proxy season.

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