Director Handbooks

A Practical Guide: Fundamentals for Corporate Directors

By NACD Staff

06/26/2012

Nominating and Governance Committee First-time Director New Director Onboarding Director’s Handbook Article Governance Board Operations

A Practical Guide draws on current guidelines and recognizes that the key determinants of successful directors tend to hold true for all firms: large or small, publicly or privately held, and for-profit or nonprofit. This book is intended as a primer for those who are new to the boardroom. It provides a convenient summary of the board's function, structure, and major committees and outlines a director’s most important responsibilities. 

This handbook includes the following topics and themes:

  • The structure of the board including the function and composition of major board committees

  • The role of the board in terms of its legal authority and relationships

  • The directors’ fiduciary obligations and practical guidelines for individual directors and the board in discharging these duties

  • The liability risks faced by directors

  • The importance of ethics in the world of corporate governance

  • Checklist of essential tips for directors and boards

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.