Proxy season is upon us. As an engaged director, you have already done everything in your power to ensure an effective annual meeting. You’ve read the annual report and proxy statement, and reviewed and discussed proxy resolutions. You consider your CEO and/or chair to be knowledgeable—and well coached by staff.
So, now it’s time to suit up and show up, right?
Not quite. There’s more. Gone are the days when the annual meeting was a “circus” for grandstanding on pet causes. Today’s shareholders are more sophisticated than ever, and their queries can be illuminating.
If you chair the board or a committee, you need to be ready to answer some challenging questions. Here are some concerns that are likely to surface.
Board chairs (and CEOs): Get ready for questions about anything under the sun ranging from the changing environment to the specifics of governance policies.
Audit committee chairs: Be ready to explain what you do to keep risk on the board’s discussion agenda. NACD’s recent Blue Ribbon Commission report on risk governance can help.
Compensation committee chairs: Be prepared to talk about pay for performance, as well as say on pay, and risk elements in compensation structures, per the SEC’s new disclosure requirements.
Governance committee chairs: Your focus must be on building a strong board. Be sure to get familiar with all the new disclosure enhancements now required—including how you consider “diversity” as you nominate directors. NACD’s reports and surveys support inclusion of diverse personal characteristics (traits such as race and gender) as well as professional background and competencies in building a strong board.
Effective board-shareholder communications is a governance cornerstone. It’s one of our 10 Key Agreed Principles, and the topic of a past Blue Ribbon Commission report. [Visit www.nacdonline.org.] It’s also the subject of an upcoming NACD tool focused on the new proxy disclosure enhancement rules.
Communication begins with you. Your engaged presence at an annual meeting—even if only as an intelligent listener—is a picture worth a thousand words. Suiting up and showing up is an important beginning. The rest is up to you.
Kenneth Daly is president and CEO of the National Association of Corporate Directors.
NACD’s Leading the Way initiative gives voice to the good work boards are doing to strengthen and restore confidence in corporate America. Participating boards agree to review their practices using the NACD Key Agreed Principles and are recognized for their leadership.
Learn more: Download the Principles at www.nacdonline.org/LeadingtheWay.
About NACD
The National Association of Corporate Directors, a nonprofit organization founded in 1977, is the country’s only membership organization devoted exclusively to improving corporate board performance. NACD conducts educational programs and standard-setting research, and provides information and guidance on a variety of board governance issues and practices. Membership comprises board members from U.S. and overseas companies, ranging from large publicly held corporations to small, private, and closely held businesses. With chapters in many major cities, NACD provides education and peer networking forums for members at both a national and local level. NACD offers the Certificate of Director Education, a voluntary development program for directors, and conducts the annual NACD Corporate Governance Conference convening and honoring exemplary directors.