When it comes to corporate governance, you’ll want to make sure your board follows best methods for success. It’s not enough just to meet the required criteria or adhere to the minimum standards. A solid board should be continually evaluating its own performance and finding ways to improve. This is how top-performing boards get ahead.
One important governance best practice is to make it clear for shareholders to be aware of the board’s role, duties, and the accountability. This includes describing the relationship of the board’s compensation with the company’s goals and defining what constitutes an effective system of supervision and checks and balances.
A clear strategy to manage the risks of a company is also essential. This involves establishing a clear understanding of the company’s short – and long-term risk profile, and working together to https://www.boardroomdeluxe.com/how-relevant-is-data-room-pricing/ determine the way in which the board will assess those risks. It also includes ensuring that the management and board have the tools to detect potential risks, such as internal factors like cultural norms or inadequate communication between directors.
Listening to shareholder concerns is also crucial. Encourage engagement. This is particularly important in the current environment of increasing shareholder activism. For instance, boards must collaborate with shareholders to recognize and address discontent from shareholders long before proxy season arrives.