2012 National Nominating/Governance Committee Chair Advisory Council Summary of Proceedings

The third annual meeting of the National Association of Corporate Directors (NACD) Nominating/Governance Committee Chair Advisory Council brought together nominating and governance committee chairs from major U.S. corporations with regulators and stakeholders—including the Securities and Exchange Commission (SEC), Institutional Shareholder Services (ISS), the Council of Institutional Investors (CII), and key shareholders—to share views and identify leading and “next practices” on a range of key issues impacting nominating and governance committee oversight.

This open dialogue highlighted a number of priorities driving the agendas of nominating and governance committees: 

  • A review of the first year of the “private ordering” rule (Rule 14a-8), which indicated that proactive communications between the board and shareholders are critical.
  • Disclosures included in public filings as the first line of communications from the board. Institutional investors indicated that they are not focused on some of the areas currently under regulatory debate, such as pay ratios.
  • Committee processes that are left to the board’s discretion, including determining director qualifications and how criteria may change in the near future.
  • The increased scrutiny on boardroom composition, and the use of tenure limits internationally to reinforce director independence. (E.g., U.K. limit of nine years before a director is no longer considered independent.)
  • Currently used methods of reinforcing director turnover, including age and term limits, and individual director evaluations.
  • Diversity as a consideration in director recruitment, once board seats have become available.