Board Oversight of Executive Performance And Compensation

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Executive Summary▸ Making sure the relative roles of the board and management are clear and agreed upon is becoming more important as market and regulatory forces compel boards to govern at levels of detail once considered micromanagement, but are now required and necessary in the current environment of heightened governance accountability.▸ A clear understanding of each other's roles and responsibilities is step one in building a solid partnership between the board and chief executive.▸ A second element of building a strong foundation for the board-CEO relationship is taking time early on to establish mutual expectations about working together.▸ The board's responsibilities in CEO performance management and compensation include setting performance expectations and goals that are clear and measurable and coaching and motivating the CEO.▸ When a CEO fails, one of the most important steps for the board to take is to look in the mirror and commit to the rigorous due diligence needed to avoid future mistakes.▸ Boards should always have CEO succession on their agenda.

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