The Handbook of Board Governance, 2nd Edition

34The Three Dilemmas for Creating a Long-Term Board

Ariel Fromer Babcock

Managing Director, Research, FCLTGlobal

Robert G. Eccles

Visiting Professor of Management Practice at Saïd Business School, the University of Oxford, Founding Chairman of the Sustainability Accounting Standards Board (SASB), and Cofounder of the International Integrated Reporting Council (IIRC)

Sarah Keohane Williamson

Chief Executive Officer, FCLTGlobal

Chapter Summary

Arguably among a company's biggest untapped strategic assets, a well-functioning corporate board of directors wields the power to meaningfully influence the purpose, culture, and direction of an organization. While many boards may display good corporate governance principles, the most effective boards at leading companies for long-term value creation are truly long-term boards. These long-term boards may look different around the world, but they share a few key characteristics:

• Time Spent on Strategy: Long-term boards prioritize the future of the business, including spending significant time on strategy, business model, risks, and the company's value creation proposition.
• Directors as Owners: Long-term boards build and perpetuate an effective board over time by acting like owners, aligning the board's interests with shareholders, often via stock ownership.
• Board-Level Engagement with Shareholders: Long-term boards possess a strong understanding of the objectives of long-term shareholders and regularly engage with them on topics of strategic ...