Governance Reading Brief

After the occurrence of the many corporate scandals of the early 2000’s, and the financial crisis that soon followed, many began to question what could have been done to prevent it. One answer that many came up with, was the creation of stronger, unbiased, efficient corporate boards, that could function as a counterbalance to the power of the CEO. The problem with this, was that before such creation began, it was essential that the key features of what made an effective corporate board be identified. Many authorities began this crucial task, making lists of what key features they thought identified an effective corporate board. David Nadler and Lawrence and Weber, are examples of authorities who created such lists. The lists created by David Nadler, his seven practices, and Lawrence and Weber’s, five “Principles of Good Governance”, are similar yet very different, and which both can be used to create stronger, more efficient boards, such as can be seen by the potential use of Nadler’s seven principles to deal with the problem of skyrocketing executive compensation and the restructuring of Citigroup’s board based upon the lists of David Nadler and Lawrence and Weber.

1. There are many ideas of what features characterize an effective corporate board, however there are two main lists used. The first of these lists is that of the five “Principles of Good Governance” presented by Lawrence and Weber in the textbook, and the second list being that of David Nadler’s seven practices. The only similarity between these lists is that both call for the evaluation of a board’s performance on a regular basis, which both lists suggest be done through the conducting of self-assessments (Lawrence and Weber, 2011, p. 323). There are many differences between the lists, for while the “Principles of Good Governance” calls for the selection of outside