• Discuss with management and the independent auditor the annual and quarterly finan-cial statements, earnings results, earnings guidance.Compensation Committee• Review and recommend re-muneration arrangements for the senior management, in-cluding the CEO.• Ensure that the organiza-tion’s compensation plans are appropriate to allow attraction and retention of the best tal-ent in the market.• Ensure that there is no loss of value for the shareholders due to overly generous com-pensation. Decide on the structure of the compensation plans (restricted stocks, op-tions, bonuses etc.). Decide on the incentive strategy (short-term vs. long term per-formance targets).Nominating Committee• Identify appropriate candi-dates in the event of a board vacancy.• Review and recommend to the board the criteria for a board membership and the desired competencies of board members.• Oversee the evaluation of the performance of the board and the management, includ-ing the CEO.ONE NEW MODEL: BOARD COMMITTEES’ RESPONSIBILITIES29
JOINING FORCES • MIT SLOAN MANAGEMENT REVIEW17on the subject of the board’s role in overseeing corporate responsibility and sustainability … In view of growing concern about business and sustainability, and given the importance of corporate responsibility for ongoing value cre-ation, directors should be asking whether their board’s oversight in those areas is sufficient.32Because short-termism is deeply entrenched in capi-tal markets, it is no small matter to fight it in the boardroom. MIT professor Robert G. Eccles has de-veloped a promising approach that may help reduce the focus on maximizing shareholder concerns so boards can think broadly and act deliberately about both long-term and short-term issues. In his recent book, The Integrated Reporting Movement(with Mi-chael P. Krzus), Eccles argues that boards should articulate a meaningful story about which stake-holders and material risks are most important to the company’s long-term goals, and communicate that story to the markets.33Eccles further comments:Companies don’t have to be beholden to short-termism. The first thing they can do is to have their board issue an annual Statement of Sig-nificant Audiences and Materiality, in which they outline the relative importance of differ-ent types of shareholders and stakeholders in relationship to each other. This statement would also outline the timeframes the com-pany uses in making decisions relevant to each audience. Since boards represent the corpora-tion, and not just shareholders — which is the common misperception — it would be good governance for them to issue such a statement so that everybody knows the role they see for the company in society.To help develop this idea, I’m working with both the UN Global Compact and the Princi-ples for Responsible Investment. One way to address it is by incorporating this idea in the new Board Program developed by the UN Global Compact, which is a series of sessions with boards of directors to help them shape their companies’ sustainable strategies.