DENNIS C CAREY
Executive Recruiter
Specializing in CEO and Corporate Director Recruiting
Streamlining Corporate Boards to Focus on Critical Functions
Corporate board work has become even more demanding in this era of activist shareholders, a 24/7 news cycle and the increased accountability of Sarbanes-Oxley. Corporate boards are looking for ways to streamline operations while remaining focused on fiduciary responsibilities to shareholders. One way to help boards stay focused on key issues is in creating a simple structure. Boards that have established just three committees—audit, compensation, and corporate governance--have found a built-in efficiency. It is critical to establish a charter for each committee so that committee members know the scope of their responsibility. Also, keeping the committees small has significant advantages. The audit committee remains a critical function for every board. What used to be the committee for new members is now a focal point for board operation. It is not only helpful to have board members who have a financial background on this committee but someone who has actually been an auditor. Audit committee meetings have full agendas making it critical for committee members to be well prepared. Keeping the big picture in mind, the audit committee must manage the outside auditor as if his or her personal reputation depended on it because it does. It’s also important to define the concept of control as it functions in the company. The compensation committee has also come under greater scrutiny from outsiders. With Web pages like paywatch.com, compensation committee members know that their decisions are placed under a microscope. In addition to the charter, the compensation committee should have members who understand how CEO pay actually works. They also recognize that shareholders are not looking for an esoteric metric for judging success but rather focus on performance that delivers higher total return. By setting requirements and then playing out various scenarios, the compensation committee is able to test the soundness of its judgment. The corporate governance committee has broad responsibilities and serves as a check for the board as a whole. Within the corporate governance committee, members also focus on director nomination including initial recruitment and reappointment. Corporate board work continues to be challenging but the payoff is a system that ensures that the enterprise does well for the benefit of all stakeholders—shareholders, employees and the community.
Dennis Carey
14850 N. Scottsdale Rd. Suite 275 Scottsdale, AZ 85254
(215) 656-5348 (480) 315-8958 dennis@denniscarey.com VbizCard Dennis Carey
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