Boards & Corporate Governance

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How Strategic Is Your Board?

Strategic thinking at the top of a company is more important than ever for business survival. But boards of directors have no clear model to follow when it comes to developing the strategic role for the companies they oversee. Should they supervise, cocreate or support strategy? A structured assessment of a board’s strategic responsibilities can bring clarity to its role in creating strategy, and boards should be prepared to change their role in strategy if the industry context changes.

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The Trouble With Stock Compensation

Research suggests that paying outside board members with equity grants leads to companies with less socially responsible behavior. That’s the conclusion of Yuval Deutsch and Mike Valente (both of Schulich School of Business, York University), who looked at social performance ratings and director compensation data for more than 1,100 U.S. public companies between 1998 and 2006. “Our findings suggest that there is a need to investigate more creative compensation arrangements,” they write.

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The Trouble With Too Much Board Oversight

The high-profile scandals of the late 1990s have increased the oversight duties of independent directors. Has the increased focus on board oversight improved the quality of board monitoring? And can board oversight become detrimental to desirable objectives? This article focuses on three aspects of oversight: design and implementation of suitable executive compensation packages; removal of underperforming CEOs; and disclosure of earnings that reflect the company’s true financial conditions.

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Bringing Opportunity Oversight Onto the Board’s Agenda

Boards have two broad responsibilities: overseeing the protection of existing value and creating new value. Even though most boards take growth seriously, in practice board oversight has become unbalanced. The imbalance between risk and opportunity is a potentially serious problem. Correcting the imbalance will require an active, constructive partnership between the board and senior leadership — and a board that understands how the company maintains a high level of value-creating performance.

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Getting Credit for Governance

Recent research relates the importance of corporate governance not to stockholders but rather to another important stakeholder: bondholders. Ever since spec­tacular failures occurred at previously well-regarded companies, the spotlight has shone on corporate governance activities as the means of preventing fraud and aligning management with shareholders’ interests.

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