Tag archives: board matters

How independent are independent directors?

Board independence is a pillar of good corporate governance. It ensures that a corporation’s management is properly monitored and that the corporation’s decisions effectively balance the various stakeholders’ interests. Over the past decades, Canadian regulators (with support from investors) have required companies to increase the number of independent directors on their boards and have created stricter requirements for what qualifies as ‘independent’. But are independent directors now truly independent?

In a US paper published by Kastiel and Nili, the authors argued that independent directors today, while technically independent, are functionally still very dependent on management. This is because of the … Continue Reading

Board watch: more complexity, more committees

As a result of the increasing and ever-evolving responsibilities falling on the shoulders of boards of directors, the traditional three key committee model (covering audit and financial reporting, executive compensation, and director nominations and board succession planning) can be inadequate. The creation of additional committees has been one way to manage the burden.  According to EY in its recent Board Matters post entitled “Board committees evolve to address new challenges”, the prevalence of additional committees reflects “changing board priorities and pressures, boardroom needs and company circumstances.”

The statistics support this: more than 75% of S&P 500 companies have … Continue Reading

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