The Governance Committee Process for U.S. Publicly Traded Firms

The Governance Committee (GC) is responsible for overseeing the effective functioning of the board of directors, but no previous research has been done on the GC process. Through in-depth interviews with 20 GC Chairs and members in U.S. publicly traded firms, we find that the GC undertakes a wide spectrum of processes as it fulfills its responsibilities in the areas of board, committee, and peer evaluation; governance principles, policies, and processes; board committee membership and leadership; director education; and Chief Executive Officer and executive management succession planning. We identify four potential threats to the GC being truly focused on improving board effectiveness: 1) A GC Chair's lack of commitment to meaningful GC processes including board evaluation; 2) Significant CEO involvement in certain GC processes; 3) A significant role of attorneys and fears of litigation in certain GC processes; and 4) A board culture not supportive of rigorous board evaluation processes or formal director...