NACD Blue Ribbon Commission Report: 2020 Update of the Diverse Board

In brief: The year 2020 has seen a renewed focus on conversations around social justice, dismantling systemic racism, and diversity—all of which have forced boards of directors to look inward and to understand the importance of having a diverse board.

This year, NACD revisited our 2012 Blue Ribbon Commission report on The Diverse Board. The piece reexamined the acute issue of board diversity and the demand for a diverse board of directors from critical stakeholders and shareholders alike. This report delves into the benefits of having a lead director focused on increasing diversity in the boardroom, creating a succession plan for the board that includes diverse candidates, and ensuring that the board incorporates an inclusive culture to foster diversity.

This resource can help your board to

• communicate the need for a diverse board of directors,
• understand the investor perspective on board diversity, and
• develop a diversity, equity, and inclusion committee charter.

Most relevant audiences: Lead directors, nominating and governance committee chairs, and nominating and governance 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.