2023 Governance Outlook: Projections on Emerging Board Matters

In brief: Each year, NACD provides directors and senior executives with a forward-looking view of business and governance risks that will require board focus over the coming year.

The 2023 Governance Outlook: Projections on Emerging Board Matters includes an analysis of NACD's 2023 Trends & Priorities Survey as well as insights and projections from NACD's partners—Broadridge, Deloitte, FGS Global, Woodruff Sawyer, and WTW. The following topics are covered this year: human capital oversight, ESG oversight, third-party risk oversight, SEC rulemaking, proxy season factors, and the D&O threat landscape.

Boards can use this resource to assist them in taking the following steps:

• Improve board oversight of human capital through connection with the five elements of global stewardship: performance, protection, planet, people, and purpose.

• Adapt board governance structures to provide effective oversight in a rapidly changing environmental and social landscape.

• Increase the board's level of understanding and engagement on the scope of third-party risk and opportunity.

• Understand implications of SEC rulemaking currently underway to the board and the company's business.

• Understand the five factors that will weigh on the upcoming 2023 proxy season.

• Consider ten issues in the current D&O threat landscape and their implication for the 2023 D&O insurance renewal.

Most relevant audiences: board chairs, CEOs, general counsel, lead independent directors, committee chairs, strategy committee members, nominating and governance committee members, audit committee members, compensation committee members, and risk committee members.

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.