GOVERNANCE BASICS
Traditionally explained as the processes and structure through which organizations are managed and held to account, it reflects how people make decisions and are accountable.
What is governance?
In the private sector, it's shareholders. In the public sector, we're referring to government and the public at large.
To whom is a board accountable?
This term describes the status of directors who have no direct or indirect material relationship with management.
What is "independent" or "independence from management"?
While Open Session board meetings are open to the public, these other meetings may be restricted to senior management or solely to directors.
What are "Closed Session" or "In Camera" meetings?
This term describes the situation in which the governance/board professional reports operationally to the Board Chair and administratively to the CEO.
What is a dotted line reporting relationship?
Governance mechanisms are designed to ensure decisions are made in the best interests of these parties.
Who are stakeholders/shareholders?
Management will develop this, with the board's oversight, but it's the board that will ultimately approve it and monitor execution.
What is a strategic plan?
Effective directors demonstrate the skill, care and diligence that a reasonably prudent person would exercise in similar circumstances.
What is "duty of care"?
Boards rely on this type of agenda to expedite routine matters and dedicate the majority of their meetings to matters that are strategic or not routine in nature.
What is a consent agenda?
The board professional prepares a planning document that identifies which matters are presented to the Board (and when), and potentially the reason for inclusion on meeting agendas.
What is a "Work Plan and Calendar" or "Forward Calendar"?
Poor governance mechanisms and poor ethical behavior were demonstrated in this company's 2001 collapse.
What is Enron?
The Board is responsible for the appointment, development, evaluation and compensation of this employee.
Who is the President and CEO?
When a director has other interests that could affect impartiality, independence or objectivity on a given topic, s/he should make a declaration and abstain from deliberations.
What is a conflict of interest (potential, actual or perceived)?
This person is a director by virtue of his/her position or office, and has voice but no vote at meetings.
What is an ex-officio director?
The board professional may take the lead in this process, which includes an education session for new members, including orientation to the portal, board culture, discussions with senior executives, identification of issues and assignment of mentors.
What is onboarding?
In 2002, the US Congress passed this legislation to protect investors. It mandated strict reforms to improve corporations' financial disclosures and to prevent accounting fraud.
What is the Sarbanes-Oxley Act (aka the Corporate Responsibility Act)?
To drive strong results and mitigate risk, a board will critically assess information provided by management. Directors respectfully challenge assumptions, and consider short- and long-term consequences in forming decisions.
Why is it that there can be a healthy degree of tension between a high performing board and management?
The board's role is one of oversight, so it delegates this responsibility to the CEO. Directors resists temptations to tinker on this front; they keep "nose in and fingers out".
Who is responsible for administration of the organization?
Boards establish by-laws and policies. They may also refer to these rules, widely regarded as the authority on meeting procedures.
What are Robert's Rules of Order?
When faced with conflicting pressures, remember that the best interests of the organization should be your bottom line.
What is a core principle to which the board professional should adhere?
This is a system of rules, practices and processes by which a firm is directed and controlled.
What is corporate governance?
The board reviews and monitors risk management processes, risk register updates and responses, and compliance with risk management policies.
What are some elements of oversight of ERM/Enterprise Risk Management?
Directors are required to act honestly and in good faith, in the best interests of the organization. They must not appropriate corporate opportunities. They must act openly and independently, maintain confidences, and not give preference to any stakeholder over another.
What is duty of loyalty/fiduciary duty?
As a result of the Sarbanes-Oxley (SOX) Act, public companies must save all business records, including electronic records and electronic messages, for not less than five years.
What is SOX compliance?
The board professional is often expected to advise both the board Chair and CEO. S/he serves as a liaison between the board Chair and CEO, and between committee Chairs and members of the executive team. S/he has dual and sometimes conflicting accountabilities.
Why is this a high pressure role? … OR ...
What are some samples of why/how a board professional must think strategically, understand governance and exercise strong communication skills and maintain effective relations with diverse parties?