Praisefor TheHandbookofBoard Governance,SecondEdition
“RichardLeblanc’sremarkableincursionintotheinnersanctumhasproducedcompellingevidenceofwhatexperiencedcompanydirectorsknow:it’snotthestructureofboardsthatdrives performance;it’sthepeopleandbehaviors.Thisworkcontinueswith TheHandbookofBoard Governance anditsimportantemphasisondirectorcompetency,behavior,anddynamics.Isthis thebeginningoftheendfor‘trophyboards’?”
—PatriciaCross, FAICDLife Chair|CommonwealthSuperannuationCorporation;Non-ExecutiveDirector|Avivaplc; SeniorIndependentDirector|AvivaInvestorsHoldingsLimited;FoundingChair|30%Club Australia;andAmbassador|AustralianIndigenousEducationFoundation
“Dr.Leblanchasimpartedwisdomofthefirsteditionof TheGovernanceHandbook toourboard, includingbestpracticesinallareasofgovernance.Copieswereprovidedtoallofourdirectors andseniormanagement.We—andGreenShieldCanada—havebenefited.Thesecondedition isenthusiasticallywelcomed!”
—SherryPeister, R.PH,BSc.Phm,ICD.D Chair,BoardofDirectors GreenShieldCanada
“TheHandbookofBoardGovernance isthedefinitiveworkforboarddirectorsandseniormanagement.IhavehadtheprivilegeoflearningdirectlyfromDr.RichardLeblancandthis Handbook isreflectiveofthegoldstandardthatisrequiredofcorporategovernance.Inaddition,Ibelieve thatthe Handbook hasdirectapplicationtoalllevelsofgovernmentconsideringthecountless agencies,boards,andcommitteesthatareappointedbygovernmentandaresubjecttostronger requirementsofaccountabilityandscrutinybythepublic.”
—DavidTsubouchi, FormerOntarioCabinetMinister,FormerRegistraroftheOntario CollegeofTrades,FormerIntegrityCommissioner,BoardMemberOMERSPensionFund
“Iwouldstronglyrecommend TheHandbookofBoardGovernance toeveryhospitalboardmember.Itisaninvaluablecompendiumoftimelyessaysoneveryaspectofboardgovernance.It isespeciallyusefulfor“justintime”learningonspecifictopicsforanewboardmember.The secondeditionrecognizestheevolvingnatureofboardgovernancebyincludingnewtopics suchascyber-crimeandclimatechange.Iespeciallyenjoyedthechapterentitled“EverySeat Matters,”whichoffersanewandcompellingframeworktoassesspotentialandexistingdirector contribution.”
—JamesMcCracken, PastBoardChair,OntarioHospitalAssociation,PastBoardChair, TheOttawaHospital
“IhaveworkedwithandconsultedRichardLeblanconanumberofoccasions.Hehasgovernanceknowledgeathisfingertips.Heregularlyadvisesboardsofalltypes,andgivesindependent,informedadviceatalltimes.Heisabouthighstandardsandatthesametimerealistic judgmentandadvicebasedonpreparationandopendiscussion.Itisapleasuretogettoknow thisremarkableacademicandadvisor.Ihighlyrecommendbotheditionsofhisgovernance handbooks.Theyaretimely,relevant,andcontainacompletecompendiumofleadinggovernancepractices.Bothshouldbeonanylawyer’sordirector’sdeskandwithinarm’sreach.”
—RobertW.McDowell, Partner,FaskenMartineauDuMoulinLLP
“TheDirectorsCollege,theGoldStandardinGovernanceEducation,enthusiasticallywelcomesthesecondeditionof TheHandbookofBoardGovernance totheinternationalmarketplace. Dozensofglobalexpertscover,in-depth,alltopicsofrelevancetopracticingdirectors.Under thewatchfuleyesofDr.RichardLeblanc,hehasassembledaforward-lookingwho’s-who galleryofauthorsandofbestgovernancepractices.Thisbookisamust-readresourceforany directororadvisortoboards.Ihighlyrecommendit!”
—Dr.MichaelHartman, Principal, TheDirectorsCollege
“IamdelightedtoprovideanenthusiasticendorsementforDr.Leblanc’sterrificbook.Ihave beenusingthefirsteditionsinceitcameoutasagreatresourceforbothmyboardworkaswell asmyconsultingengagements.Bothareoutstandingandleadingedge!”
—Andrew (Andy)Poprawa,CPA,CA,C.Dir. Advisor,Consultant&IndependentCorporateDirector
ChairoftheBoard,EducatorsFinancialGroup;ChairoftheGovernance&HRCommittee, CanadianScholarshipTrustFoundation;Chair,AuditCommittee,MotusBank;andChairof theBoard,CopernicusLodgeLTC
“Thesecondeditionofthe HandbookofBoardGovernance shouldbereadandkeptasareferencebyeveryoneinvolvedingovernance.RichardLeblanchasassembledpapersbyover 75internationalexperts.Thebookcoversmostofthetopicsaboardmembercanfacetoday. Amusthave.”
—ClaudeLamoureux, FormerCEOofOntarioTeachers’PensionPlan
“Iampleasedtoendorseandwelcomethismuch-neededsecondeditionandtheworkof Dr.RichardLeblanc.Iamparticularlypleasedtoseeentirepartsdevotedtoshareholder, climate,andtechnologygovernance.Allarevitallyimportant,andarguablyessential,toa well-functioningcorporategovernancesystem.Thisbookmakesasignificantcontribution.”
—CatherineMcCall, ExecutiveDirector CanadianCoalitionforGoodGovernance
“Theclimatecrisishasbecomeamainstreambusinessissue.Itiscreatingwinnersandlosers andariskofenormousliabilities,withmuchmoreahead.Businessesthereforefacefar-reaching anduncertainrisksandopportunitiesthatarewithouthistoricalprecedent.
Manycorporateboardsareill-preparedfortheserisks,andforregulators’andinvestors’ growinggovernanceanddisclosureexpectations.Howmuchmustdirectorsdotofulfiltheir fiduciarydutiesofclimategovernanceanddisclosure?
Fordirectorsofallcompanies,thiscomprehensive,well-writtenhandbookisanexcellent placetostart.Itwillhelpthemtoasktherightquestionsaboutclimatechange-relatedrisks andopportunities,andtomakeinformeddecisionsaboutbothriskmanagementanddisclosure. Timespentstudyingthesechaptersisawiseinvestment;ignorethematyourperil.”
—Dr.DianneSaxe, SaxeFacts.com StrategicAdviceandPresentations,Climate,Energyand Environment,2015–2019,EnvironmentalCommissionerofOntario
“ProfessorLeblanc’s HandbookofCorporateGovernance isanindispensableguide.Itiscomprehensive,wellwritten,andaccessible.Itcoversthekeyaspectsofgovernancethatalldirectors shouldbeintimatelyfamiliarwithinapractical,straightforwardfashion.Iamparticularly pleasedthatthesecondeditionaddressesnewanddifficultgovernancetopicsincludingclimate changeanddigitization.”
—DianeMacDiarmid,
ChiefTalentOfficer,QuadRealPropertyGroupDirector,Altus Group,andFormerDirector,MorneauShepell
“Dr.Leblanc,alawyerandProfessorofGovernanceatCanada’ssecondlargestuniversity,isa renowned,internationalexpertinhisfield.Heknowseverynuanceofeveryprotocol.Hewrites clearlyandalwaystellsthetruth.Somereadersmayfindsomeofhisviewscontroversialbut theywouldbewisetothinktwiceassomeday,theymayregrettheyhadn’t.”
—Dr.GaryPolonsky,ICD.D, wasCEOto3boardsfor25yearsinpost-secondaryeducation andaDirector(twiceasChair)tovariousboardsintheprivatesector,healthresearch, andnationalmuseums
“Thesustainabilityofcompanies,investments,andcommunitiesdependsheavilyondecisions madebythemenandwomenwhoacceptthecalltogovern.Howcantheyservemosteffectively?Tomyknowledge,thereisonlyonepersonontheplanetwhohasdevotedanentire careertostudyingthisimportantquestion:Dr.RichardLeBlanc,notedscholarandboardadvisor.Inthissecondeditionofhissuccessful Handbook,joinedbyexpertsfromaroundtheglobe, hesharesanswersonacomprehensiverangeofpracticalissuesconfrontingfiduciariestoday.”
—Dr.AlexandraReedLajoux, ChiefKnowledgeOfficerEmeritus,NationalAssociationof CorporateDirectors
“WeaskedDr.Leblanctoprovidehis Handbook toourDirectorsandLeadershipManagement Team(LMT)ofTravisCreditUnion.WethenworkedwithDr.Leblanctoapplythelearnings inthe Handbook toenhancethegovernanceandstrategicplanningofTravisCreditUnion. OurBoardhasmadegreatprogresswithourcompetencyandattributematrices,utilizing Dr.Leblanc’sassessmenttoolsandgapanalysis.OurCEOandLMTdevelopedValue DriverstofurtheradvanceandexecutetheStrategicPlan.Theenthusiasmiscontagiousand Dr.Leblanc’sguidancewaskeytoouralignment.
Dr.Leblanc’ssecondeditionisimpressiveinthemidstofthedigitalenvironmentwhen “print”demandsexcellenceandrelevance!EveryboardchairandCEOshouldhavethistimely resourcewithinreach,rightnow.Welldone!
—PatMoreno, ChairoftheBoard,TravisCreditUnion
“Even20yearsago,anewcorporatedirectorcouldfeelcomfortableinhis/hernewrolehaving readagoodlegaldescriptionofadirector’sresponsibilities.Thatandhis/herexperiencestood themingoodstead.That’swoefullyinadequatetoday!
Businessandcommercearechangingsorapidly,andwiththesechangescomenumerous challengesforboards,whoneedtoensurethesenewevolvingissuesarebeingtakenseriouslyby management.Thecontentofthissecondeditionof TheGovernanceHandbook (comingonlyfour yearsafterthefirstedition)validatestheneedfordirectorstostaycurrentwithnewemerging issuesandtrendsinbusinessandgovernancethatmustbeunderstoodandrespected.
Climate,technology,riskandfinancial,strategic,humancapital,andcompensationgovernance,aswellaslegalgovernanceandresponsibilitiesareallupdatedforthereader.Anydirector wishingtokeepcurrentwillbewellservedbyreadingthisbook.
Iexpectfutureeditionstoberequiredreadingeveryfewyears.”
—RobertE.Lamoureux
,FCA,FCPA,ICD.D,ChairoftheBoard,ForestersFinancial
“Thefirstandsecondeditionofthe Handbook aretobecommendedfortheirfocusonrisk governanceandinternalaudit,includingthelinesofdefense,andindependent,coordinated assurancereportingtotheAuditCommittee.Thisisakeystrengthofthis Handbook,whichI highlyrecommend!”
—M.E.(Peggy)Gilmour, CPA,CA,CRMA,ICD.D,BoardChair,InstituteofInternal Auditors,TorontoChapter;FormerChiefAuditor,Metrolinx;andBoardMember,Ontario PowerGeneration,andFormerBoardMemberandAuditCommitteeChair, OntarioPensionBoard
“Iampleasedtoprovideanendorsementtothesecondeditionof TheHandbookofBoard Governance and,inparticular,itsforward-lookingandfuturisticnature.Ihavereviewedthe blockchainandothertechnologygovernancechaptersandtheyareexcellent.”
—DougMcLean, DeputySuperintendent,Insurance BritishColumbiaFinancialInstitutionsCommission
“WehaveenjoyedworkingwithDr.Leblancandbenefitingfromhiswisecounselandthe comprehensiveandup-to-date HandbookofBoardGovernance settingoutthemyriadcomplex tasksthatgoodboardsareexpectedtoperform.Dr.Leblancistobecommendedforonceagain pullingtogetherinoneplacetheviewsofthoughtleadersandpractitioners.Irecommendthe secondeditionforanyDirector.”
—JeanMajor, ChiefExecutiveOfficerandRegistrar, Alcohol&GamingCommissionofOntario
“HavingworkedwithDr.Leblanc,Iamconfidentthissecondcomprehensivehandbook willcontinuetoprovidepracticalguidancetoallwhoshareourcommitmenttoeffective governance.”
—PaulG.Smith, ChairmanandChiefExecutiveOfficer, FrontlineBroadbandInc.
“Thesecondeditionof TheHandbookofBoardGovernance isamust-readforanydirector keepingabreastofconstantcorporategovernancechange.Itiswellwritten,current,relevant, andcoverstheentirefieldofgovernanceinonecomprehensivevolume.Ihighlyrecommend!”
—NicoleMorin, CorporateSecretary, MentalHealthCommissionofCanada
“AsProfessorLeblancfinalizesthesecondeditionofthe Handbook,Ihavecarefullyreviewedthe materialandamveryimpressedwiththecurrencyoftopicsandthebreadthofopinionprovided. IamalsoimpressedwithDr.Leblanc’sstandingcommitmenttopromotinggovernancethat makesadifferenceandthatheiswillingtobedirectandchallengingtoachievethatend.Getting thecultureinaboardroomrightiskeytogivingsubstancetobestpracticesthatmanyboards haveinplace,butareoftengivenlipservicewhenmakingdecisions.Iamhappytoendorsethis secondedition!”
—DavidScriven, SeniorStrategicAdvisor, TechnicalStandards&SafetyAuthority
“Iamproudtoendorsethissecondeditionofthe HandbookofBoardGovernance byDr.Leblanc. Richardhastrainedmanydirectorsonbestpractices.Ihighlyrecommendthis Handbook toany not-for-profit,association,foundation,orhealth-careboarddirectors.Thecoverageandscope ofauthorsmakesitamusthaveforanydirector!
—DinaPalozzi, FormerCEOandSuperintendent,FinancialServices,FinancialServices CommissionofOntario;PastChair,CanadianAutomobileAssociationOntarioandMackenzie Health;andDirector,HospiceVaughanandtheTorontoCentreforFinancialSectorSupervision
“TheHandbookofBoardGovernance,secondedition,isaninvaluableresourceforallcorporate governanceprofessionals.Asthecorporategovernancefieldcontinuestoexperiencedramatic change,thishandbookoffersreadersaninvaluablesetofbestpracticestoimplementwiththeir ownboards.WehaveenormouslyenjoyedourgovernancejourneywithDr.Leblanc.”
—LesleyRoss, CorporateSecretary, TarionWarrantyCorporation
“Dr.Leblancisaleaderinthegovernancefield.Thestrengthofthe Handbook istheattention paidtoriskgovernance,thelinesofdefense,andanindependentandeffectiveinternalaudit function.IknowfrommyworkwithDr.Leblancofhiscommitmenttoastronginternal auditdepartmentasthefoundationforoverallgovernance.Thetwogohandinhand,and thisthemecontinuesinthesecondedition.This Handbook isamusthaveforanyriskofficer, headofinternalaudit,headofcompliance,orauditcommitteemember.”
—TonyStanco,CPA,CA,Manager,AuditandInvestigation OntarioEnergyBoard
“Goodgovernanceisaboutproperaccountability,leadership,reporting,assurance,andcontinuousimprovement.WehavebenefitedfromDr.Leblancandthe Handbook.Perhapsmost importantisthe Handbook’s attentiontodetail,rigor,andcommitmenttobestgovernancepractices.Iwholeheartedlywelcomethesecondedition!”
—AnneMullen, CorporateSecretaryandChiefofStaff Windsor-DetroitBridgeAuthority
“Ihighlyrecommendthesecondeditionofthis Handbook foranynot-for-profitorassociation boardofdirectors.Wehaveimplementedthebestpracticesinthefirstedition,andhaveworked withDr.Leblancoverthelastthreeyears,andourboardhasbenefitedandbecomemoreeffectiveasaresult.Personally,Ihavegainedtremendousknowledgeonboardgovernance.”
—MackieI.Vadacchino, CEO,BioforceCanadaInc.,and ViceChair,CanadianHealthFoodAssociation
“IamdelightedtoserveasanenthusiasticreferenceforDr.Leblancandhiswork.Mohawk Collegehasrefinedandimproveditsgovernancepracticesbasedontheboardretreatthat Dr.Leblancparticipatedinandtherecommendationsthathehelpeddevelopwithour governors.Dr.Leblanc’sthinkingandrecommendationshaveguidedourworkeffortsand focusoncontinuousimprovementinourgovernancepractices.Ourgovernancewasalready good,butbyfollowingDr.Leblanc’ssuggestions,hehasmadeusmuchbetter.
CongratulationsontheupcomingsecondeditionofDr.Leblanc’sbook!”
—RonMcKerlie,
President,MohawkCollege
“Ihighlyrecommendthissecondeditionof TheHandbookofBoardGovernanceto anycorporate secretaryorgovernanceprofessionalwhoseekstohaveaneffectiveandhighlyfunctioning board.Theextensivenessandwisdomimpartedisaninvaluablelearningandreferencetoolfor bothboardmembersandseniorstaff,andprovidesreaderswithavitalsetofbestpracticesfor considerationandimplementation.”
—LucyFoster, ExecutiveDirector,BoardGovernance MunicipalPropertyAssessmentCorporation
“Ilookforwardtodiggingintothesecondeditionof TheHandbookofBoardGovernance.The firsteditionwasatremendousresource.Iamsurethenextwillfurtheradvancegovernance thinking.”
—MichaelBassett, Director,ResearchImpactandContentStrategy,TheConference BoardofCanada
“RichardLeblanc’scontributionto Listed wasbeyondthewordsandknowledgeofgovernance issueshesharedwithourreaders,butalsothecredibility,credence,knowledge,andreputation hebroughtto Listed magazine.Wishingyoueverysuccesswithyournewbook.”
—MartyTully, Publisher, Listed magazine
“Dr.Leblanc’seagerlyawaitedsecondeditionestablishesnewgovernancestandardsandpractices.Itbringstotheforemoreknowledgeandchallengesboardsandindividualdirectors needtoexaminethemselvesinastricterlight.Dr.Leblanc’sworkisassistingusinreformingthegovernanceofnot-for-profitsportingorganizations—itisanewbenchmarkthatwill leadusintoaneweraofgovernance.Therelevantlearningiswellworththepriceofthis book!”
—JackieBuckingham, ChiefExecutiveOfficer,CanadaArtisticSwimming
“ProfessorLeblanctaughtmeusingthefirsteditionofthe Handbook whenIattendedhissummercorporategovernanceclassatHarvardUniversity.Wecoveredtheentirefieldofcorporate governance.Ihighlyrecommendthesecondedition,includingitsfocusonwomendirectors, genderdiversity,sustainability,andboardsinthenon-profitsector.
—ReneeYardley,BComm,MBA,A.L.M.,SeniorVicePresidentSalesandMarketingat SustanaFiber,andDirector,Fondationdel’HôpitalgénéralduLakeshore/LakeshoreGeneral HospitalFoundation
“Aboardofdirectorsconsistsofagroupofindividualshavingdifferingbackgrounds,beliefs, andexperiences.Thatdiversitybringschallengesandopportunities.Thissecondeditionofa comprehensivehandbookprovidestheframeworktohelpboardpractitionersidentifythose challengesandtransformthemintoopportunities.Filledwithtopicsthatarenecessaryfor directorstofulfilltheirduties,andinsightsfrommanyoftoday’sthoughtleaders,Dr.Leblanc’s collectionisamusthaveforanyoneworkinginthecorporategovernancearena.”
JamesE.Nevels, DirectorofAlcoaCorporationand LeadIndependentDirectorofWestRock
“Thissecondeditionof TheHandbookofBoardGovernance containsthoughtfulanalysison criticalemergingissuessuchasclimatechange,technology,thedigitalworldandthecorporation’sroleinsociety.
Inaddition,theglobalperspectiveoffered,throughchaptersoncross-bordergovernance,as wellasinsightsintocorporategovernanceinAsia-Pacific,China,Russia,andtheCaribbean, roundoutthemostcomprehensivetextofitskind.
ProfessorLeblancistobecommendedforhisforward-thinkingleadership,assistanceto boards,andcommitmenttoadvancingbettergovernanceglobally.”
—Hon.A.AnneMcLellan, PCOCAOE
“TheHandbookofBoardGovernance isnotjustfordirectors.ItisforCEOsandaddressesthe complexandvitalBoard-CEOandPresident-CEOrelationships.The Handbook isapplicable toalltypesofboards,includingsportingandnationalboards.Dr.Leblanchastrainedonrisk, composition,leadership,succession,compliance,andtoneatthetop.Ihighlyrecommendthe secondeditiontomypeers.”
KimVanBruggen, ChiefExecutiveOfficer,TriathlonCanada
“Iwouldstronglyrecommend TheHandbookofBoardGovernance toeverynonprofit,publicsector,andprivatesectorboardmember.Itiscomprehensive,timely,andonpoint.Dr.Leblanc’s commitmenttoboarddiversityshinesthroughatatimewhenboardsarepayingmoreattention totheissuegiventheincreasingdemandsofinstitutionalinvestorsandcreditratingagencies.I alsofoundthecannabischaptertobeaninterestingreadgiventheimportanceofsoundgovernancetothisnewindustry.”
PamelaJeffery, Founder,Women’sExecutiveNetwork,Canada’sMostPowerfulWomen: Top100Awards,andtheCanadianBoardDiversityCouncil;Chair,OntarioAdvisoryBoard, Fire&Flower;andChair,HumanResourcesCommittee,StratfordFestivalBoardofGovernors
THE HANDBOOK OF BOARD GOVERNANCE
SECONDEDITION
ACOMPREHENSIVEGUIDE
FORPUBLIC,PRIVATE, ANDNOT-FOR-PROFIT BOARDMEMBERS
RICHARDLEBLANC,Ph.D. EDITOR
Thissecondeditionfirstpublished2020
©2020byJohnWiley&Sons,Inc.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
EditionHistory
JohnWiley&Sons,Inc.(1e,2016)
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LibraryofCongressCataloging-in-PublicationData
Names:Leblanc,Richard,1965-editor.
Title:Thehandbookofboardgovernance:acomprehensiveguideforpublic, private,andnot-for-profitboardmembers/RichardLeblanc,PhD, editor.
Description:Secondedition.|Hoboken,NewJersey:JohnWiley&Sons, Inc.,2020.|Includesindex.
Identifiers:LCCN2020004342(print)|LCCN2020004343(ebook)|ISBN 9781119537168(hardback)|ISBN9781119537120(adobepdf)|ISBN 9781119536994(epub)
Subjects:LCSH:Boardsofdirectors.|Corporategovernance.
Classification:LCCHD2745.H36342020(print)|LCCHD2745(ebook)|DDC 658.4/22–dc23
LCrecordavailableathttps://lccn.loc.gov/2020004342
LCebookrecordavailableathttps://lccn.loc.gov/2020004343
CoverDesign:Wiley
CoverImage:©MartinBarraud/GettyImages
PrintedintheUnitedStatesofAmerica 10987654321
ToNancy,andtomystudentsandclients,whohavetaughtme farmorethanIhavetaughtthem
—RichardLeblanc
PartI:TheBoard’sFirstResponsibility:TheRightCEO3
PartII:TheBoard’sSecondResponsibility:TheRightBoardChair5
PartIII:WhoIsattheBoardTable?BoardComposition,Dynamics, andDecision-Making7
PartIVA:ClimateGovernance10
PartIVB:TechnologyGovernance13
PartIVC:RiskandFinancialGovernance16
PartIVD:StrategicGovernance23
PartIVE:HumanCapitalandCompensationGovernance25
PartIVF:LegalandGovernanceResponsibilitiesofDirectors29
PartV:ShareholderEngagementandBoardAccountability31
PartVI:Not-for-ProfitGovernance34
PartVII:SmallandMediumCompanyGovernance36
PartVIII:GlobalCorporateGovernance37
PartI:WhereDidtheLeadDirectorRoleComeFrom?165
PartII:WhoAreToday’sLeadDirectors?168
PartIII:WhatResponsibilitiesDoLeadDirectorsHave?170
PartIV:WhatChallengingIssuesDemandtheMostAttention
RegulatoryEmphasisonDirectorIndependence201 IndependenceofMind201 HowBoards(andCEOs)CircumventDirectorIndependence204 ExamplesofManagementCapture204 BestPracticestoStrengthenDirectorIndependence206 BoardsShouldCollectivelyDecide:HowMuchCompromising ofDirectorIndependenceIsAcceptable?207 TheSystematicGrayingofIndependentDirectorsandBoards207 Conflict-Free,IndependentAdvisors208 DirectorCompetency209 DirectorCompetencyDefined209 “CEO”IsNotaCompetency209 “Experience”IsNotSynonymouswithCompetency211 TheDirectorCompetencyMatrix211 ValidationofDirectorCompetency211 WhenDirectorCompetencyIsOutdatedorIsNotReflective oftheStrategy213 BoardDiversityMatrix213 Targets213 DirectorBehavior215 AssessingImportantDirectorBehaviors215 DirectorBehaviorandBoardDynamics219 AssessingOverallDirectorEffectiveness222 AddressingRegulatoryandInvestorRenewalEfforts:WhatBoards ShouldBeDoing222
ResistancebyBoardstoDemonstrateDirectorSelectionBased onCompetency,andDirectorTenureBasedonPerformance223 DirectorPrerogativeBeingChallenged224 IndependentGovernanceReviewstoStimulateRenewal226 Self-ReviewsoftheBoardConstituteaConflictofInterest, asDoesManagementFacilitation226
WhyClimateChangeIsaCoreCorporateGovernanceIssue337 ClimateChangeasaForeseeable—andOftenMaterial—Financial Risk337 ClimateChangeasaFinancialStabilityandEfficient MarketsIssue338 TaskForceonClimate-RelatedFinancialDisclosures339 ShareholderResolutions,Voting,andEngagementon ClimateChange340
TheSustainableDevelopmentGoalsAreDrivingtheValue-Creation StoryofClimateChange341 IncorporatingClimateChangeintoTheBoard’sRoleon Governance,Strategy,RiskManagementOversight,andDisclosure342 ClimateChangeandDirectors’DutiesinKeyCommonLaw Jurisdictions344 FromEthical“CorporateSocialResponsibility”toFinancial RiskandReturn344 DutiesofTrustandLoyalty346 DutiesofCompetenceandAttentiveness347 EnforcementofDirectors’Duties349 DirectorLiabilityforMisleadingorInadequateDisclosuresRelating toClimateChange350 EnforcementofDisclosureObligations351 D&OInsurance351
ASkillShortageattheTop503 CaseStudy:HowAgfa-GevaertIncreasedTheirBoard ITGovernanceCapability504 BenefitsofBoardsBuildingInformationandTechnologyLeadership Capability506 WinnersandLosers507 TheCaseofTargetUSA,December2013508 SevenAreasofETGRiskBoardsNeedtoKnowAbout509 ThreeBarrierstoEffectiveBoard-LevelETG513 RapidRiskResponseIsanEmergingFormofAgileGovernance513 BoardETGAccountabilitiesandNewCompetencies517 FivePracticalStepstoStartTransformingYourBoard519 TaketheFirstStepsTowardDigitalTransformation520 EvaluatetheDigitalCapabilityofYourExecutiveTeam520 EstablishaDigitalVisionfortheOrganization520 ReviewBoardGovernanceStructuresandProcesses521 ConsiderYourBoard’sAgility521 Conclusion521 AbouttheAuthors522
GlossaryofTerms527 Introduction:BlockchainEnhancementsinCorporateGovernance530 SmartContracts531 DistributedLedgerTechnology(DLT)532 DigitalAssetEnhancements532 InstitutionalImperativesinDigitalCurrency533 WhatRoleWillDAOs(DecentralizedAutonomous Organizations)ServeinCorporateGovernance?534 Facebook’sProposedLibraCoin:TheDAOinPractice535 WhatRoleDoesBoardGovernanceServeinaDigitalCurrency Environment?537
TheRoleofDASIsandTheirPotentialImpactinCorporate Governance538 JurisdictionalConsiderationsforSTOLaunch538
VotingRightsand“SmartContracts”:ComplianceAutomation539 WhatRoleWillSmartContractsServeinCorporateGovernance?540 HowSmartAreSmartContracts?541 WhatAretheMainBenefitsofSmartContracts?541 WhatAreSomeLegalLimitationsofSmartContracts?542 ExtendingSecurityTokenProtocolswithVotingRightsWhile ShoringUpEfficiencies542
VotingSystemsasaBlockchainUseCase544 DigitalCurrency:SecuritiesRegulatoryImplications545 TheExtraterritorialReachoftheSEC545 SEC Howey asaLitmusTest545 RegulatoryArbitragewithSTOs546 ImplicationsofRegulatoryArbitrageforDigitalCurrencyIssuers547 SecurityTokenIssuances:BoardConsiderations549 BoardInquiriesofManagementAboutBlockchain551 ImpactofDigitalCurrency:KeyLessonsLearned552 Conclusion:GovernanceEfficiencyandEffectiveness554 AbouttheAuthor554 Notes555 References555
21Blockchain:AnIntroductionforBoardsofDirectors556 Dr.ElizabethValentine,Dr.GregTimbrell,LachlanFeeney, andDr.JohnPuttick Introduction556 WhatIsBlockchainandWhyIsItImportant?557 WhyIsKnowledgeofBlockchainImportanttoBoards?559 TheElementsoftheBlockchainTechnology559 BlockchainandDistributedSystems560 WhatIsaSmartContract?560 HowBlockchainUsesSmartContracts560 HowSmartContractsWillRevolutionizetheWayWe DoBusiness561
AnExampleofHowItWorks—PurchasingTheaterTickets561 HowIsSecurityCreatedandWhatAboutHackers?563 IndustryDisruption,Impacts,andConsiderationsforBoards564 BankingandPayments564 ImpactsforBankingandPayments564 ConsiderationsforBoards565 TheStart-UpIndustry565 Impacts565 ConsiderationsforBoards565
