Corporate Governance Tips for a Strong Board


Your board should follow the best practices regarding corporate governance. However, it’s not enough to just check the appropriate boxes and adhere to the minimum requirements. A solid board must continually examine its own performance to discover ways to improve. The most effective boards are ones which excel in this particular area.

A key best practice in governance is to help shareholders to be aware of the board’s role, responsibility, and accountability. This includes explaining the aligning of the board’s compensation to the company’s goals, and defining what constitutes a successful system of oversight as well as checks and balances.

A clear and precise framework for managing the risks of the company is also essential. It is crucial to be aware of the company’s risk profile, both short- and long-term, as well as work with the board to decide how it will evaluate the risks. It is also important to ensure that the board has the tools to recognize risk factors. This includes internal factors like cultural practices and poor communication between directors.

It’s also essential to listen to shareholder concerns and encourage their participation. This is especially crucial in the current context of increasing shareholder activism. For instance, boards should collaborate with shareholders to identify and address shareholder discontent prior to the time of proxy season.