Insight
Considering the committee's interactions with the board, management, and auditors as well as its composition.
The chair should consider the dynamics of the AC. An important question for the AC chair is, “how do AC members interact with each other, with the chair, and with the board, management, and auditors?”
The chair should also consider the overall AC composition (ensuring the committee includes the “right” mix of people with the appropriate mix of hard and soft skills).
- Qualities to look for in AC members include integrity, collegiality, trustworthiness, and professional skepticism, including a willingness to probe and ask tough questions.
- Do we have an appropriate mix of current experience and relevant skill sets: financial reporting expertise, industry knowledge, and global perspective? Depending on the role of the committee (e.g., IT, risk, etc.), are there other skills we need to add?
The AC chair needs to work closely with the chair of the nominating/governance committee in the AC member selection process to assess:
- The committee’s effectiveness in working together
- The working and communication styles of individual members
- The AC chair should also work closely with the nominating/governance committee chair on plans for both committee and chair succession
- AC chairs often seek AC member agreement on a process for ongoing, regular review of the committee’s dynamics, as well as an ongoing development program focused on the committee’s dynamics.
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