One of our regular discussion topics is ESOP Corporate Governance. As you know, most .published corporate governance information is geared towards public companies. Fortunately, if put in the proper context, this information is still very useful and relevant for ESOP companies. What Boards Should Be Doing Right Now takes a more detailed look at the Responsibilities of the Board of Directors and shares a memo that highlights some of key actions that boards should consider.
Board Involvement in Corporate Strategy
- Corporate Functions Supporting Strategy
Risk Management Oversight
- Consistent Views of Risk
- Board's Involvement in Risk Management
- Risk Spectrum
- Role of Key Corporate Functions
- Organizational Structure and Reporting; Role of Internal Audit
- Proper Corporate Culture
Fraud Detection and Prevention; FCPA Compliance
- Evaluate Current Programs
- Consider Appointing Senior Officer as "Czar"
- Monitor Pending Legislation
- Consider the Relationship between Anti-Fraud / Anti-Corruption Programs and Executive Compensation Program
Communications with the CEO and Senior Management; Succession Planning
- Communications with CEO
- Proper Succession Planning
Information About the Company's Business
- Understand Business Model and Practices
- Review Current Pool of Information
- Access to Management
Executive Compensation
- Trends in Executive Compensation
- Say-On-Pay
- Disfavored (and Favored) Pay Policies
- Relationship to Risk
- Tools for Reviewing Executive Compensation
Focus on Election of Directors and Shareholder Voting
- Understanding How Shareholders Will Vote
- Understanding Broader Issues in the Shareholder Base
- "Withhold" Campaigns
Board Engagement in Communications and Investor Relations
- Knowledge of Shareholder Base
- Communications Strategy; Channels and Events
Board Leadership
- Review Board Leadership Structure
- Rationale for Board Leadership Structure
- Continuous Board Improvement
Improving Board Performance; Board Development and Management
- Board Composition and Individual Qualifications
- Performance Processes and Metrics
- Director Education
- Executive Sessions
- Board Compensation Practices
Directors and Officers Insurance
- D&O Insurance Policy Review
- Severability Provisions
- DIC Coverage
Legislative and Regulatory Developments
- Appropriate Board Updates; Contingency Planning
- Cross-Corporate Alignment
- Legislative Interaction; Ambassadors for the Company
Although not every item applies perfectly to private ESOP companies, this article contains a wealth of knowledge and should be read by all ESOP companies. We will discuss this article in more detail in upcoming posts. We will also be discussing the 2009 required and discretionary plan document changes and have our annual ESOP planning series, so stay tuned for more ESOP fun over the coming weeks.
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