The Conference Board Governance Center Issues Recommendations To Corporate Boards on Overseeing Risk Management and Executive Compensation -- Suggests Better Risk Oversight and Stronger Links Between Pay and Performance

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Source: The Conference Board Governance Center

The Conference Board Governance Center issued today the first in its new series of reports on the oversight role of the board of directors in the current economic crisis.

The report identifies “pressure points” for pragmatic boardroom discussions on how to improve corporate directors’ performance in areas such as the oversight of risk management and executive compensation.

“The problems faced today by some financial institutions result from the inordinate risks undertaken by engaging in the subprime lending business or by trading mortgage-backed securities packaging those subprime loans, which then defaulted,” says Matteo Tonello, Associate Director, Corporate Governance Research at The Conference Board and author of the report. “Similarly, it is believed that the excessive risk-taking by some firms might have been encouraged by improperly designed incentive-based compensation.”

It is the responsibility of the corporate board to oversee the company’s risk exposure as well as ensure a strong link between pay and performance. This duty is inherent in the role that boards of directors perform in determining a business strategy that generates long-term shareholder value.

“In these difficult times, The Conference Board is renewing its commitment to provide guidance to the boards of directors of its member companies,” concludes Tonello. “With this series of practical reports and with the recommendations included in this new report, we are drawing upon years of research in corporate governance by The Conference Board as well as the experience developed through our Commission on Public Trust and Private Enterprise and our Directors’ Institute.”

For more information or to receive a copy of the report, contact Matteo Tonello at +1 212 339 0335 or email matteo.tonello@conference-board.org

About The Conference Board
The Conference Board is the world’s preeminent business membership and research organization. Best known for the Consumer Confidence Index and the Leading Economic Indicators, The Conference Board has, for over 90 years, equipped the world’s leading corporations with practical knowledge through issues-oriented research and senior executive peer-to-peer meetings. The Governance Center at The Conference Board brings together senior executives from leading world-class organizations and institutional investors in a non-adversarial setting to debate and develop innovative corporate governance practices.

Source:
The Role of the Board in Turbulent Times:
Overseeing Risk Management and Executive Compensation—Pressure Points for Corporate Directors
EA#292, The Conference Board

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