Key Questions to Advance Racial Equity in Business Practices

Institutional racism continues to be present in our societies, and the systems and beliefs that contribute to it have been thrust to the forefront in recent months. As a critical part of our society, the onus is on corporations to dismantle practices inside their organizations that contribute to institutional racism.

Many companies are now starting to probe their own long-standing businesses practices. The following questions will help directors to identify business practices that could contribute to perpetuating racial biases and institutional racism in corporations, and to provide oversight of racial diversity, equity, and inclusion initiatives within their companies.

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.