board of directors topics

Don't be surprised if your colleagues raise these topics and if they don't, maybe you should. Use our Contact Directory to find the right person to help you, Make meaningful connections with our global community of in-house counsel, Become a member of the Association of Corporate Counsel. It also doesnt hurt that engaged directors will gain feelings of shared commitment and understanding just from being more involved. to add constructive value to the corporate strategy? Transitions . If youre hesitant to put hard questions about your organization on the table for fear of scaring off directors, fear not, to be involved in strategic discussions. Investors (including activists) and certain proxy advisors are actively monitoring board oversight and responsiveness to ESG factors and comparing the companys ESG performance to that of its peersand laggards face a heightened risk of consequences, particularly during proxy For example, BlackRock reported in July that it had identified 244 companies during the 2020 proxy season that were not doing enough to prepare their businesses for, or inform investors about, risks related to climate change. As Vanguard stressed in its investment stewardship report this year, investors are seeing increasing evidence that nontraditional but material risks related to ESG topics, including cybersecurity, can damage a companys long-term value. The World Economic Forum, in its Global Risks Report for 2020, also flagged cyberattacks as the second most concerning risk for doing business globally in the coming decade. Baylor President Linda Livingstone, greeting football head coach Dave Aranda before a game last season, will serve as the Big 12's chairperson for the Board of Directors. So how can you boost board engagement and meeting effectiveness? only review and approve the management teams proposed strategies. What's next for boards of directors | McKinsey Summarized below are highlights and practical suggestions for corporations and boards to consider in the new year. ), but is Exxon mostly reflective of how hard sustainability may be in natural resources, versus tech, media, or financial services? In addition, it is clear that companies are now expected to do and say more when it comes to tracking, reviewing and disclosing ESG data. With all that said, the task and legal duty of a board of directors is fundamentally unchanged; it must use care and diligence and exercise its business judgment in weighing risks and opportunities to chart the path forward for the corporation. This should be tailored for any given corporation, including by articulating the particular objectives and values that animate the corporations business strategy, and taking into consideration key corporate constituencies such as shareholders, employees, suppliers, customers and communities. Boardsareincreasinglyconfrontedwiththepossibilityofwrongdoingimplicatingthecompany oritsemployees. In addition, 86% of respondents stated that they expect sustainability will increase their profits in the coming year, reflecting the increasingly prevalent theme that environmental sustainability should be a driver of, rather than an offset against, profitability. The support of shareholders in particular will continue to be essential to corporations as they work to identify and operationalize their ESG goals. Moreover, starting in 2016 with the publication by the World Economic Forum of The New Paradigm of corporate governance, and intensifying in 2019 with the shift away from shareholder primacy to stakeholder governance by the Business Roundtable, this has been the subject of intense discussion not only in boardrooms, but also in academia, the halls of legislators and regulators and by special interest groups. . In conversations with boards that. Put simply, board members are expected to do more, do it better, and take greater accountability than ever before. BlackRock further indicated that it had voted against directors at 22% of those companies, and that the remaining 78% of companies are on watch the following year if they fail to make progress. In addition, a recent McKinsey report identifies five specific actions that boards may take to embed a sense of purpose in their corporations: (1) build an authentic purpose narrative with management, engaging stakeholders proactively, (2) own purpose in board practices, including board composition and agenda, (3) assess purpose commitments to ensure goals are defined and clear, and that there is accountability at all levels of the corporation, (4) use purpose as a lens in making key board decisions, including those regarding strategy, risk, performance management and governance and (5) drive organizational accountability for purpose through management evaluations and reporting. This, in turn, has prompted companies to pressure test many of the baseline assumptions that have factored into their risk management calculations, and to think more holistically about the risks and opportunities facing their businessesincluding systemic threats and the complex ways in which businesses are dependent on the well-being of other stakeholders. Annalisa Barrett and Susan Angele of the BLC review trends in board diversity disclosures at S&P 500 and Russell 3000 companies. In this regard, ESG metrics can provide useful tools for directors to analyze and monitor progress. TheSECsowncyberbreachhasbroughtrenewedfocusattheagencyoninformationsecurityandtheintegrityoftradingsystems. One of our product specialists will give you a 30-min tour of our board management software. This accountability will accelerate as ESG metrics become more standardized. Companies should implement and maintain comprehensive cybersecurity risk mitigation programs, data and system testing procedures, and cyber incident response plans. Typically, board member terms will be staggered so that only a few seats will be vacant each year. Afteraslowstartto2017intermsoflegislativewins,theHouseandSenatearepoisedtosendthefirstcomprehensivetaxreformbilltothePresidentsdeskinmorethanthirtyyears. Have you and other board members read your organizations brochures? Topics with new or increased focus for board meetings include: - Board diversity includes director overboarding limits. Companiesandtheirboardscanhelpaddressthesetensionsbybetterunderstandingemployeeexpectations,encouragingcross-generationmentorship,andsettinganexampleofgenerationaldiversitywithrespecttocompanyleadershipandmembersoftheboard. In-house counsel can help the board by anticipating investor and shareholder interest in certain topics. Another tool available to help spur progress on diversity and other ESG issues is incentivizing employees to achieve quantifiable ESG goals. As problems arise within the board, it would also be appropriate to schedule a training around what Roberts Rules has to say about how to manage a specific problem in a democratic way. 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Some Thoughts for Boards of Directors in 2022. Culture is a key ingredient in a corporations ability to attract talent, improve business performance, and drive long-term value. Think about what others know about your organization. Each of the leading ESG disclosure frameworks contemplates certain annual disclosures regarding percentages of management and other employees by gender and, where relevant, racial, ethnic and other minority status, as well as information related to gender-based pay disparity. The wealth gap between the richest and poorest families in the country more than doubled between 1989 and 2016, and the middle class, which once comprised the clear majority of Americans, is shrinking. Featured insights and programs Insight 2023 Audit committee survey insights Stopping Scandals Before They Happen AMCHP Announces 2023 Board of Directors Election Results 10 board readiness training programs for directors and executives Relevant Topics - KPMG We also expect to see a continued focus on racial diversity from institutional investors. Are you hearing feedback from your directors that your credit union board meetings are bland? In the same survey, only 10% of directors felt they understood the industry dynamics in which their companies operate, and, as a result, only 21% of them claimed to have a good understanding of their organizations current strategy. There is a trend, evidenced both by pledges signed by major corporations and by legislation recently adopted in California, for increased racial and ethnic diversity requirements for boards. Get the board excited about training and start slow. Accordingly, a companys risk management structure should include an ongoing effort to assess and analyze how technological developments may impact the corporations profitability and prospects for sustainable, long-term value creation. Powered by ESGAUGE, allows corporate and board leaders, investors, and other stakeholders to compare diversity disclosure practices by sector, index, and company size. - Expert advisors such as accountants are helpful. - Legislative changes Fulfilling this purpose in this manner is fully consistent with the fiduciary duties of the board of directors, and the concomitant stewardship obligations of shareholders. In this environment, many costs and risks that were previously viewed as externalitiesincluding, but not limited to, climate change and environmental sustainabilityare increasingly being taken into account by both corporations and investors as directly relevant to business strategy, risks and operations and financial results. - Directors' duty to act in good faith includes ensuring the company has adequate reporting systems. But why should your board waste time on discussions that arent productive with directors that arent appropriately engaged in the first place? Using a board member self-assessment tool may uncover some areas where board members need more education. Survey Results, 2022 ACC Chief Legal Officers Survey Key Findings. Contact us to learn more about Aprio board portal software. 10 Hot Topics In the 2020 Boardroom - Boardspan Dozens of climate change suits against major corporations are already pending, many brought by municipalities (represented by class action attorneys) seeking billions of dollars to pay for structural responses to climate change. Closing the information gap for board members. Martin Liptonis a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. Or perhaps its the fear of changing the way the board has always done things, or the view that youre taking away the job of the management team. It is more important than ever to have a clear understanding of, and conviction about, the corporations purpose. Board of Directors - B of D: A board of directors (B of D) is a group of individuals, elected to represent stockholders . Commendable, but the most interesting medium term issue may be uptake in terms of how different sectors, industries and countries deal with the issues, which we tend to view mostly from a US perspective. Were happy to help assess your needs and the fit with Aprio. Highlights and excerpts from recent KPMG Board Leadership Center publications and interviews, as well as critical information from across KPMG specifically for audit committee members and the full board. The CEO guide to boards | McKinsey With board meeting software, you provide directors with convenient, online access to a full library of board materials thats easy to search, and simple for note taking and online discussion. Many of the challenges that corporations and their boards have encountered in 2020 will continue to be front and center in 2021, including the COVID-19 pandemic, the movement to address racial injustice and broad-based socioeconomic inequality, an accelerating sense of urgency around climate change, technological innovation and an evolving political and regulatory climate. More recently, the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) announced they are merging to form a new organization called the Value Reporting Foundation, which will link IIRCs integrated reporting framework with SASBs disclosure standards. Considerations and questions for directors to ask about racial equity audits and other civil rights audits. What is the future outlook? How to Accelerate Board Effectiveness Through Insight and Ongoing Education Heres our top 10 shortlist: Education for board members really starts before any board meeting, when directors review materials and have discussions with other board members and executives. Why the disconnect, then? Suchinitiativescanserveasbothdifferentiatingandvalue-enhancingfactors. However, a related study found that 44% of directors, are shut out from strategic dialog and are asked instead to. How does our risk profile compare to our peers? What is the methodology for creating our allowance for loan loss? Some companies have responded by, for example, enhancing job security, providing additional paid sick leave or covering employees medical costs. Board of Directors: Overview, Functions, & Different Structures Patrick M. Shanahan joins Leidos board of directors. On December 3, 2020, Senator Mark Warner released the first part of a proposal for legislation, Toward a Resilient 21st Century American Capitalism: Investing in Workers and Promoting Inclusive Growth. And in a September 2020 white paper containing draft legislation and regulations, B Lab and The Shareholder Commons proposed substantial amendments to federal law that would establish new obligations and requirements to alter the fiduciary duties of corporations and institutional investors. Some Thoughts for Boards of Directors in 2021 - The Harvard Law School While the landscape of considerations that shareholders and other constituents expect directors to bear in mind has become increasingly broad and more complex, directors continue to be governed by the same legal duties. WhilethedifferencesbetweentheHouseandSenatebillsstillneedtoberesolved,thenewTaxCutsandJobsActisexpectedtopassbytheendoftheyearandwillpresentbothbenefitsandchallengesforcompaniesinimplementationandadaptationasunintendedconsequencesareinevitablyuncoveredinthemonthsandyearstocome. and staggered boards. Nine issues for boards to keep in mind as they carry out their 2023 agendas. Regular topics that in-house counsel can expect to be discussed at board meetings include: - Compliance issues Relatedly, investors are making clear that board oversight of cybersecurity risks should be a priority. Any information that is printed on brochures, the website, online, or in other public spaces is information that board members need to know. Given the current landscape, as well as President-elect Bidens plan to prioritize action on climate change, corporations that fail to adapt to the climate challenge face potential liability, reputational harm and operational setbacks. Accordingly,inanefforttoavoidrunningafoulofU.S.sanctions,boardsshouldbevigilantinunderstandinghowtheseevolvingrulesapplytothebusinessactivitiesoftheircompaniesandmanagementteams. This post is based on an Akin Gump publication by Ms. Berchem and Ms. LaFollette,Daniel F. Feldman,Lauren Helen Leyden,Michelle A. ReedandLauren OBrienas well as several other lawyers from across the firm in a variety of practices. These resources are not intended as a definitive statement on the subject addressed. Strategicplanningwithaparticularfocusonpotentialacquisitionsshouldcontinuetobeahighpriorityforboardsin2018. Flex+Strategy Group Founder and CEO Cali Yost talks with KPMG Board Leadership Center Senior Advisor Stephen Brown about how boards are overseeing the challenges of creating a long-term strategy for remote operations and flexible work arragements. More than a few directors are feeling outmatched by the ferocity of changing technology, emerging risks, and new competitors. - Cybersecurity and data privacy are issues that boards must deal with, particularly when questions arise about what a company is doing to mitigate cybersecurity risks because investors will be asking. Posted by Kerry E. Berchem and Christine B. LaFollette, Akin Gump Strauss Hauer & Feld LLP, on, Harvard Law School Forum on Corporate Governance. The evaluation and weighing of these factors have also been facilitated by technological advances in processing and distilling large amounts of multi-dimensional data, so that increasingly attenuated linkages can be identified and quantified. There is no existing list of rubber-stamped topics for boards of directors, because of the uniqueness of every business, but several topics make for good training workshops for nearly organization. Board of Director Training Topics | BoardEffect Martin Liptonis a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. Some Thoughts for Boards of Directors in 2022 - The Harvard Law School AI governance and oversight; preparing for quantum computing; diversity and driving innovation and African American board representation. A recent HSBC study found that 78% of surveyed corporations had set environmental targets for themselves, a 10% increase compared to last year. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Accordingtorecentstudies,companieswithstrongCSRpracticesarelesslikelytosufferlargepricedeclines,andtheytendtohavebetterthree-tofive-yearreturnsonequity,aswellasagreaterchanceoflong-termsuccess. Topics include confronting modern boards . As ESG is increasingly incorporated into strategic and operational decision-making, it will likely become more salient in the context of mergers and acquisitions. September 2, 2016 Board of Director Training Topics Written by Jeremy Barlow On the surface, it may seem that board members don't need any training. Any of those needs would make a good topic for board training. Corporate management bears [] If they seem unfamiliar with the content, a topic on getting to know the organization better would be a fabulous first topic. On the surface, it may seem that board members dont need any training. Issues related to ESG include reviewing ESG goals to make sure they are up to date; focusing on the fact that institutional investors may rely on ESG ratings to make investment decisions; and adding ESG metrics to incentive compensation planning. Explore critical boardroom challenges and priorities through the Lead Director / Independent Chair lens. In conversations with boards that Aprio serves, we hear that board technology that makes it easy for board members to access and review board materials anytime, from anywhere, has a significant impact on improving board engagement and meeting attendance. Dan Siciliano, chairman of the Federal Home Loan Bank of San Francisco and Codex Fellow at Stanford Law School, talks with KPMG Board Leadership Center Senior Advisor Susan Angele about challenging long-standing norms and practices of board operations and effectiveness. Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on, Harvard Law School Forum on Corporate Governance, on Some Thoughts for Boards of Directors in 2022, Related research from the Program on Corporate Governance includes. Getting investors to work with your startup is just the beginning of the entrepreneur/investor relationship., One of the most difficult challenges for todays boards is tackling cyber threats successfully. Consistent with the SECs December 2019 guidance, corporations should engage proactively with auditors regarding applicable emerging technologies that may affect a companys financial statements or internal control environment. While socioeconomic inequality is a daunting, complex and systemic challenge, corporations are essential components of any solutionby serving as engines of broad-based employment opportunities and prosperity, by recognizing the importance of employee well-being to the success and sustainability of their businesses and by fostering symbiotic relationships with the local communities in which they operate. Many companies have spent considerable time and attention this past year in responding to calls for heightened transparency for employees, investors, regulators and other stakeholders. However, corporations do not exist in a vacuum, but rather in a complex ecosystem of stakeholders. A Board's mandate is to establish policies for corporate management and . They should also be aware that every board member carries a responsibility for carrying out the strategic plan. NASDAQ also recently proposed new listing rules, which would require companies to disclose consistent diversity statistics for boards, as well as setting a standard for companies to have at least two diverse board members, including one woman and one minority director. In particular, employee health and safety has been a top priority with significant repercussions not only for business performance but also in terms of reputational capital, corporate culture and investor expectations. Board of directors - Wikipedia Governance training will help you to understand the role of nonprofit board directors and what . As we have long advised, the board should, in consultation with management, set the tone at the top and work to create a corporate culture that gives priority to ethical standards, professionalism, integrity and compliance in setting and implementing both operating and strategic goals. after all the work thats been done to recruit skilled and diverse directors, why wouldnt you invite them. What are the risks and benefits of business lending? , both by Lucian A. Bebchuk and Roberto Tallarita; by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forum, by Leo E. Strine, Jr. (discussed on the Forum, The Illusory Promise of Stakeholder Governance. This list prepared by the Association of Corporate Counsel stems from the ACC 2021 Annual Meeting session Land on Board Talk: Topics You Should be Discussing with Your Board, by Steven Stokdyk, Latham & Watkins, Victoria McKenney, Deputy General Counsel, US Steel, and Ahmed Mousa, Chief Business Officer and General Counsel, Pieris Pharmaceuticals. KPMG and the Latino Corporate Directors Association examine Latino representation in the boardrooms of U.S. companies. And, in this environment, boards are seeking to optimize their functioning and leadership role to navigate these challenges as well as the evolving expectations of stakeholders. Many major corporations have announced commitments to racial equality, financial and otherwise, including Apple, PayPal, LEGO, HP, Verizon, Uber, Bank of America, Visa and many others. In that regard, there were several significant developments over the past year to drive toward a consensus approach. Suite 1090, 1090 West Georgia Street These Board members began serving on June 22, 2023. Without that education, its hard for them to be actively engaged in your board meetings. Viewed through this lens, the fundamental purpose of a for-profit corporation, and, accordingly, the decision-making calculus of boards, must include value-creation. Ten Considerations for Boards of Directors - The Harvard Law School For their part, investors have continued to make environmental sustainability an engagement priority. Another focal point of investors has been the importance of corporate culture and the ways in which that is tied to the preservation and creation of value. With engaged and educated directors, board meetings. Board composition, Boards of Directors, Corporate Social Responsibility, Cybersecurity, Diversity, SEC enforcement, Securities enforcement, Securities regulation, Shareholder activism, Taxation More from: Christine LaFollette, Daniel Feldman, Kerry Berchem, Lauren Leyden, Lauren O'Brien, Michelle Reed, Akin Gump Companies are realizing that there needs to be limits to the number of boards a director can serve on. InadditiontonewleadershipattheSEC,ambitiouslegislativeproposalsinCongressandfurtherdevelopmentsininsidertradinglawhavethepotentialtoimpactSECenforcement,althoughcertainenforcementstreams,suchasaccountingandotherdisclosure-relatedinvestigations,arelikelytoremainlargelyunchanged. Boards should assess their members needs and the needs of the full board to identify additional topics for training. Another area that has changed significantly during the pandemic is corporate communications and disclosure practices. The conference consists of CEOs, directors, regulators, jurists and scholars who are experts on a broad range of subjects relevant to board members. , involving directors in strategic dialog boosts board effectiveness. Perhaps its the fear that making the board agenda more strategic will convey the message to directors that only expert input is really useful. Read The Practitioners Guide to Building Efficient Board and Committee Processes: What Really Needs to Happen Behind the Scenes, by Mark Roellig, ACC Docket, July 30, 2020. Despite giving every board member a board handbook, its tempting for many board members to set it on a shelf and let the dust collect on it. Perhaps its the fear that making the board agenda more strategic will convey the message to directors that only expert input is really useful. Boardsshouldexpecttofaceconflictingpressures,sinceshareholderswillexpectcompaniestoinvestinbothlong-termgrowthopportunitiesandshort-termstockenhancementmeasures,includingthedeploymentofexcesscashforstockbuybacks. Audit committee oversight of critical alignmentsof strategy, risks, incentives, performance metrics, internal controls, and more. A board of directors is responsible for protecting . WeexpectthattheTrumpadministrationandtheRepublican-ledU.S.Congresswilladvancereformsin2018designedtoencouragecompaniestowardpublicownershipandtofacilitatecapitalformationinbothpublicandprivatemarkets. This post is based on a Wachtell Lipton memorandum by Mr. Lipton,Steven A. Rosenblum,Karessa L. Cain,Hannah Clark, andBita Assad. After all, they were likely recruited to join the board because of their knowledge and expertise of the organization and its business. Reviewing the strategic plan and allowing time for questions is a valuable topic for training. Studies show that engaging directors in strategic dialog, as well as educating them in your organizations challenges, is essential to retaining directors and achieving productive board discussions. NSCA welcomed the new 2023-2024 NSCA and NSCA Education Foundation leadership on July 1, 2023. Byembracingcorporatesocialresponsibility(CSR)initiatives,boardsareabletoproactivelyidentifyandaddresslegal,financial,operationalandreputationalrisksinawaythatcanincreasethecompanyvaluetoallstakeholders-investors,shareholders,employeesandconsumers. By using the site, you consent to the placement of these cookies. - Board of directors diversity has become an issue that companies must address. on educational sessions to consider adding to your board meetings. Without that education, its hard for them to be actively engaged in your board meetings. For more detail about the structure of the KPMG global organization please visithttps://home.kpmg/governance. You can unsubscribe at any time. Many major institutional investors have also endorsed specific frameworks in an effort to drive convergence. Related research from the Program on Corporate Governance includesThe Illusory Promise of Stakeholder Governanceby Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forumhere);For Whom Corporate Leaders Bargainby Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forumhere); andToward Fair and Sustainable Capitalismby Leo E. Strine, Jr (discussed on the Forumhere).
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