Strengthening Compliance and Ethics Oversight

In light of renewed regulatory focus, directors should consider strengthening their oversight of corporate compliance and ethics programs. U.S. Department of Justice emphasis on the effectiveness of compliance and ethics programs in preventing, detecting, and mitigating the risk of individual wrongdoing is raising the bar for companies' compliance efforts. This Director Essentials guide offers an overview of the board's role in compliance oversight and outlines critical questions directors can ask management to assess whether compliance and ethics programs have a real impact on business conduct. The guide will be especially helpful for onboarding new directors and as a resource for board members who wish to refresh their knowledge about core governance topics. 

How boards can use this resource:

• Understand the roles and responsibilities of a director in overseeing compliance and ethics;

• Learn about the specific regulatory guidelines on corporate compliance and ethics programs;

• Ignite discussions with management on business conduct and specific elements of the corporate compliance and ethics program;

• Assess the effectiveness of corporate compliance and ethics programs.

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.