Boards – 2012 To Do List

Of all the topics that boards are currently considering as part of their 2012 to do list (i.e. better risk management, taming executive compensation, more constructive engagement on strategy) I think that there’s one major topic missing….that is, the board’s separate-from-management ”accountability for the performance of the organization”. Shareholders need to start seeing an Annual Board Performance Report…..just as they do with with Management’s Annual Financial Report to the Shareholders. That way, shareholders can get some sense as to whether or not the board was doing its job as “governors” – which is an activity separate and distinct from management’s.

Moreover, when a company’s performance goes well, the board get’s to take credit along with management – and often does. But when a company fails, it’s almost always only management who pays. They get fired – and typically with millions in severance. Directors, however, need to know and demonstrate to shareholders that there are “job related consequences” for them – along with management – when company performance fails. They too should be replaced….and even volunteer to do so. Now that’s accountability!

Leave a Reply