Corporate Governance
Definition of Good Corporate Governance
We ground our approach in a comprehensive understanding and definition of good corporate governance, but with a decidedly practical bent. We focus on three interlocking elements, each of which entails significant challenges for all boards:
LAW:
The law has placed the corporation’s governance in the board’s hands. But with the advent of the Sarbanes-Oxley Act, new stock exchange and regulatory imperatives, investor pressure, and recent state court rulings, the standards of good corporate governance and their application to director and executive conduct have profoundly changed.
IMPLEMENTATION:
Boards must put into practice the principles of corporate governance promulgated by the law. To do so, they must develop and maintain—through full board action and board committee establishment—a system of delegation of powers, review of significant actions, and processes for oversight of the company management that don’t cross the fine line between monitoring and meddling.
HUMAN DYNAMICS:
Boards today are overwhelmingly composed of non-management directors prized for their diversity of background and experience and for their independence of thought and action. This increased diversity of perspective, along with the board’s newly evolved roles and new governance requirements, can create significant stumbling blocks to a constructive working dynamic characterized by independent directors in a collegial atmosphere that promotes discussion, debate, and collaborative decision-making.
The essence of good corporate governance lies in the practical—and, for each company, unique—integration of these three elements in a carefully structured, smoothly functioning board where directors are ever on the alert for ways to improve their effectiveness. Embodying a definition of corporate governance that transcends narrow legal issues and the mechanics of compliance, our approach helps our clients achieve the integration of the legal, the operational, and the interpersonal dynamic that characterizes the most effective boards.