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Management article
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Reference no. SMR3612
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 1994
Length: 11 pages

Abstract

How can a board of directors be strengthened so that it can more effectively evaluate a company''s performance, assess its management, and act to change the course of a corporation? The authors suggest eleven steps to reform a board''s character and fortify its monitoring function. Among them are composing a completely independent board, with no company employees except for the CEO; establishing a lead director; aligning management''s and directors'' compensation with shareholders'' interests; and strengthening the audit committee.

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Abstract

How can a board of directors be strengthened so that it can more effectively evaluate a company''s performance, assess its management, and act to change the course of a corporation? The authors suggest eleven steps to reform a board''s character and fortify its monitoring function. Among them are composing a completely independent board, with no company employees except for the CEO; establishing a lead director; aligning management''s and directors'' compensation with shareholders'' interests; and strengthening the audit committee.

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