Risk Oversight Sexual Misconduct FAQ

In brief: The movement that began in 2017 for victims to openly share their experiences as victims of sexual harassment, known as the #MeToo movement on social media, has called attention to the prevalence of workplace sexual misconduct. Corporations have had to clean house, in many cases firing individuals in the top levels of leadership in government, business, academia, and the nonprofit sector.

The movement has broad implications for corporations and their boards, which oversee risk and culture at the organization. This memo offers board-level guidance on strengthening oversight of this important issue.

The focus on the board’s compensation committee has never been sharper. The components of compensation plans and the link between compensation and company performance are under intense scrutiny from shareholders, employees, policymakers, the media, and other stakeholders. The Report of the NACD Blue Ribbon Commission on the Compensation Committee revisits NACD’s 2003 Report of the NACD Blue Ribbon Commission on Executive Compensation to highlight the new environment in which compensation committees—and, more broadly, boards—are now operating. It recommends that the compensation committee and board work together to establish an executive compensation philosophy that supports the company in creating long-term, sustainable value.

The report includes ten specific recommendations for compensation committees to consider when evaluating their compensation philosophies. It also provides practical tools, such as sample compensation committee charters, a compensation committee assessment, and guidance on executive employment contracts.