2020 Strategic Risks for Boards

In brief: M&A activity has been volatile as the coronavirus pandemic has shifted business priorities and halted or instigated deals. As boards have worked to help their management teams navigate the current M&A environment, it has become increasingly important that boards understand how both their own companies and their acquisition targets are dealing with disruption in key risk areas. Trade compliance, tax issues, and data privacy remain key risks for boards in 2020. This brief, written by Baker Tilly and originally appearing in the 2020 Governance Outlook: Projections of Emerging Board Matters, focuses on ensuring that boards remain prepared to provide oversight of critical risks for their management teams and overall strategy.

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.