Truly Effective Boards
It's becoming increasingly clear that the landscape has changed—permanently. That means it won't go back to the way it was. In other words, ensuring compliance with the letter and spirit of the new requirements will continue to require attention going forward. This is not a case of “done once and forget about it.” Sarbanes-Oxley, stock exchange listing requirements, SEC rules, Dodd-Frank, and other rules and expectations of investors—especially institutional investors and other major shareholders—require ongoing diligence.
But experienced directors and senior executives recognize that the requirements, for the most part, deal with issues of form, not function. Yes, they are important because they're now legal or regulatory mandates, and also can serve as enablers to effective board performance. But as noted, some boards that have always done these things still have not been very effective, while others had few of the now-mandated practices in place yet have been highly effective. What makes a board truly effective is something else entirely. Experienced directors—having spent a disproportionate amount of time on the new mandates that deal for the most part with additional disclosures to and empowering shareholders and imposing checks and balances on management—want to get back to the business of providing the chief executive and senior management team with value-added advice, counsel, and direction on critical issues facing the business.
So where is board ...