​Corporate Governance Guidelines: Reviewing One Company's Document​

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​General Dynamics has shared their Corporate Governance Guidelines and they make interesting reading.

I am not going to comment on whether I think this is a great document or not, except to say that it has some provisions I really like and others I question. Rather, let me point out a few areas that I think merit some thought and, perhaps, comment from you:

  • The general statement of board responsibilities does not include any discussion of risk oversight or even whether performance is optimized; perhaps these are both thought to be "understood."

  • That section discusses the selection but not the termination of the CEO.

  • Directors are not expected to speak for the company without the approval of senior management.

  • Under Qualifications, there is no mention of how the director will add value. Perhaps this will be beefed up as a result of the Dodd-Franks legislation.

  • Directors may serve on as many as four other boards. Audit committee members may serve on to other audit committees.

  • Directors over the age of 72 are subject to re-election restrictions.

  • The CEO may act also be the chair of the board.

  • Although the board and its committees perform self-assessments, there is no requirement for the assessment of individual directors.

  • There is no separate risk committee (nor IT, for the IT enthusiasts).

  • Whistleblower activity is not directly shared with the audit committee — it goes to the ethics officer.

  • There is no statement supporting board diversity.

Comments are welcome.


 

 

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