You’ll want your board to follow the best practices in corporate governance. It’s not enough just to tick the appropriate boxes or follow the minimum rules. A solid board must continually review its own performance to discover ways to improve. This is how the best boards are able to stay ahead.
One important governance best practice is to ensure that investors to understand the role of the board, its obligations, and accountability. This includes explaining the alignment of the board’s compensation with the goals of the company and defining what constitutes an effective system of supervision and checks and balances.
A clear and precise framework to manage the risks faced by the company is essential see post as well. It is important to understand the company’s risk profile as well as the short- and long-term. Then, collaborate with the board to determine the best way to assess these risks. It is also about making sure that the board and management have the tools to detect the risks, which could include internal factors like cultural norms or poor communication between directors.
It’s also essential to listen to concerns of shareholders and encourage their participation. This is particularly crucial in the current climate of increased shareholder activism. Boards, for instance, should collaborate with shareholders in order to find and address the issues of shareholder discontent prior to the time of proxy season.