Boards have few responsibilities as important, or as difficult, as ensuring that relevant measures are in place to assess corporate performance. Measures are critical to such governance responsibilities as determining the effectiveness of established corporate strategy and tracking its implementation, and appropriately motivating and compensating the chief executive and management team.
Against a backdrop of shareholder cries for boards to “pay for performance,” directors are working diligently to identify the right measures. But it’s not easy, and many boards continue to struggle toward that goal. Directors are also challenged in determining how best to comply with performance-related disclosure requirements of the new Dodd-Frank law and Securities and Exchange Commission regulations.
