Report of the NACD Blue Ribbon Commission on the Diverse Board

This year’s Blue Ribbon Commission examined the issue of board diversity. Evidence continues to mount on the benefits of diversifying the board’s members with respect to gender, age, ethnicity, and skill sets. Despite the observed benefits, boards have yet to move away from the “traditional” board—those with little to no diversity.

The Commission’s challenge was to identify the barriers to diversity and provide a roadmap to bring new perspectives into the boardroom. The result was what this Commission calls a “Strategy of Inclusion.” This three-step strategy asks boards to: 1) Discuss their current composition, 2)select and implement solutions to improve board diversity, and 3)disclose their search process and the potential value diversity brings to the board.  

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.