A business’s success depends on policies that serve the requirements of stakeholders, investors and managers. Corporate governance provides the foundation for how companies set and implement these policies. Effective governance is more essential today than ever before in a world of ever-changing demands and expectations.
Effective corporate governance requires a thorough understanding of the company’s values, culture and mission. It is also necessary to establish systems that ensure a business is able to identify and mitigate risk events before they occur. This includes establishing an ethical code of conduct, effective reporting channels and regulating conflicts of interests.
The board of directors must promote transparency, openness and accountability to all internal and external stakeholders. The responsibility of the board is to ensure that the resources of the company are used in a way that will generate long-term value for shareholders. This is achieved through an assessment process that involves identifying risks, establishing risk management strategies, and monitoring performance against the objectives.
Boards should think about http://www.theirboardroom.com/what-is-a-board-meeting-agenda appointing an independent director who is the lead (also called the presiding Director) to ensure that they are leading their boards independently. This is particularly important in the case of an executive chair and a chair position. Boards should include non-management employees in the evaluations of CEOs, if necessary and also evaluate the overall performance of senior management.
The board should regularly engage with shareholders and other stakeholders on issues that impact the long-term value of the company, even if they are not in the position of directly influencing the corporate strategy or decision-making process. It should encourage shareholders that want to influence corporate decisions to publicly disclose their identity and ownership, when federal securities laws allow it.