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Shearman & Sterling LLP 6 | The Importance of Adding Culture to the Board Agenda TEN PRACTICAL RECOMMENDATIONS The NACD report provides 10 recommendations to help boards proactively engage on corporate culture and regularly measure and monitor company-specific values and behaviors. 1 6 Sustainability Efforts Sustainability Efforts 2 7 4 9 5 10 Ensure that the board, CEO and senior management establish clarity on the foundational elements of values and culture and develop concrete incentives, policies and controls to support the desired culture Integrate culture into ongoing discussions with management about strategy, risk and performance, emphasizing that means are as important as ends Assess whether the general counsel and other officers in key internal control roles are well positioned within management and in relationship to the board to foster an appropriate culture Communicate to shareholders how the board carries out its responsibility for overseeing and actively monitoring culture Regularly review the culture of the whole board and its key committees Review the company's recognition and reward systems to ensure they reinforce the desired culture and avoid unintended outcomes Ensure that board policy documents and committee charters clearly delineate allocation of culture oversight responsibilities Ensure that culture is an explicit criterion in CEO selection and that the CEO and senior leaders do the same in their own leadership development and succession planning Ensure that directors and company leaders take a forward looking, proactive approach to culture oversight with a level of discipline comparable to leading practices in risk oversight Regularly assess culture using both qualitative and quantitative information and include data from outside sources, including monitoring for red flags 3 8