SEC Commissioner Luis A. Aguilar discussed the important role of the Boards of Directors at the 12th Annual Boardroom Summit and Peer Exchange in NYC. There are significant challenges facing corporate boards and their responsibilities are critical with respect to executive management and the overall direction of the company. According to Aguilar, there are three specific areas that merit special attention.
First, enhanced communication between companies and shareholders. Effective engagement and communication between companies and shareholders establishes a strong foundation for corporate governance. For example, foster engagement by hosting a virtual annual meeting.
Second, the increasing importance of board resiliency and oversight on crisis and risk management. Whether it be man-made or the effects of Mother Nature, risk management is integral to every aspect of a company’s long-term well-being. One of the most important and growing risks being cybersecurity, which highlights the next point, ensuring that boards remain relevant and effective.
Aguilar states, “The ascendance of cybersecurity on board agendas in recent years highlights the fact that the pace of change has accelerated dramatically in the business world.”
The board needs to work together to anticipate potential challenges and opportunities and apply their expertise to help navigate them. This might mean bringing in fresh viewpoints that question the status quo. Which begs the question, should there be term limits for directors?
“Ultimately, the question centers on whether the board is composed of individuals who possess the appropriate skills, experience, and judgment to govern effectively,” explained Aguilar.
There are many challenges facing corporate boards today but if they continue to learn and find effective processes it will result in a strong foundation for good corporate governance.
To read Aguilar’s entire speech visit