Director FAQs and Essentials

Strengthening Risk Oversight Director Essentials

By NACD Staff

10/27/2016

Risk Committee Strategy and Risk Risk Oversight

In brief: As corporate fiduciaries, directors play an essential role in risk oversight, a responsibility that has significantly increased in complexity over the past few years. This new Director Essentials report offers a detailed overview of practices each director can adopt to strengthen risk oversight. Each method includes red flags, suggested approaches, questions to ask, and additional resources. 

 

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.