Corporate Governance and Ethics

Chapter 5

Board Committee Roles and Responsibilities

INTRODUCTION

RELEVANCE OF BOARD COMMITTEES

AUDIT COMMITTEE

COMPENSATION COMMITTEE

CORPORATE GOVERNANCE COMMITTEE

NOMINATING COMMITTEE

OTHER BOARD STANDING COMMITTEES

SUMMARY

KEY TERMS

REVIEW QUESTIONS

DISCUSSION QUESTIONS

NOTES

INTRODUCTION

The oversight function of corporate governance is performed by the company's board of directors and its designated committees. Boards of directors perform their advisory and oversight function through well-structured, planned, and assigned committees to take advantage of the expertise of all the directors. Board committee formations and assignments depend on the size of the company, its board, and assumed responsibilities. Committee members address relevant issues and make recommendations to the entire board for final approval. Board committees normally function independently from each other and are provided with sufficient authority, resources, and assigned responsibilities in assisting the entire board.

Primary Objectives

The primary objectives of this chapter are to

• Provide an overview of the functions of board committees.
• Understand the roles and responsibilities of board committees.
• Be aware of the objectives of establishing board committees.
• Become familiar with the duties, responsibilities, and composition of the audit, compensation, nominating, governance, and special committees.
• Understand the process and emerging practices for the election of corporate directors.

RELEVANCE OF ...