In this article, the executive director of the ESG Center and the managing director, ESG, of The Conference Board identify seven key areas for board focus in light of the COVID-19 pandemic, essentially an update, given today’s practices and today’s crisis, of the Board’s 2009 report in the wake of the financial crisis. At the end of the day, while the pandemic has led to “increased responsibility, scrutiny, and uncertainty” for boards, the authors advocate that boards address those demands with “increased humanity. This is a time for board members to acknowledge their own abilities and limitations, as well as those of others; to act with increased understanding, compassion, and respect toward each other; and to call upon the untapped reserves of resilience and resourcefulness that abide in us all.”

Although the health and economic challenges of the current pandemic are ones not seen in many decades, the authors consider today’s boards to be “generally better prepared to address an economic crisis today than in the past.”  In their view, “boards can best respond to this crisis, and prepare for what follows, by maintaining (and in some cases clarifying) the respective roles of board and management; by focusing on their company’s short-term survival and long-term sustainability; by keeping in mind all their company’s stakeholders (including employees, customers, investors, and communities); and by embracing the broad and indispensable roles that their corporations serve in society.”

  • The authors observe that now is hardly the time for a full review of board processes and responsibilities, and, fortunately, most U.S. public companies have governance policies and leadership structures in place (with 67% of the Russell 3000 having a lead independent director).  However, the authors advocate that boards agree on the following:
    • The frequency of board interactions with management during this crisis period, which may vary over time and could be determined by the LID or Chair.
    • Whether, while still conducting appropriate oversight, the board should give more latitude to management in specific areas, such as “approving variances to budgets, modifications to debt instruments, and changes in compensation and benefits programs.”
    • Whether the company has the resources and expertise to manage this crisis, or whether outside experts should be engaged to assist both management and boards.
    • In light of the requirement for social distancing, how best to manage board and committee communications, with chairs ensuring that virtual meetings are disciplined, inclusive and not dominated by the loudest voices. More specifically, they recommend that companies “avoid having directors (or a subset of directors) exchange messages between or during board meetings, which can undermine the collective decision-making process.”  They also recommend that individual directors “refrain from deluging management with suggestions, no matter how well-intentioned. An individual director’s idea will often be improved, and management will have a more reasonable workflow, if suggestions are first vetted by the board or appropriate committee—or, at the very least, funneled through a committee chair or lead independent director/independent chair.”
  • Strategy and Planning. Boards will need to continue to focus on strategy in the short- and long-term, including the implications of short-term actions for the long term, Strategy development, the authors recommend, should involve scenario planning that addresses different levels of economic downturn. The authors also recommend that the board ask management to undertake a continual “lessons learned” approach that can be used, in due course, to make adjustments to strategy, operations and finance or even to consider new opportunities.
  • Risk Oversight. Here too the authors advise boards to “keep the longer term in mind.” With the pandemic in mind, boards should use the moment to refresh the typical board-level risk reviews—which may have become somewhat stale over time—by asking management to update the inventory and assessment of risks.  boards will then need to review the risk inventory with fresh eyes, ensuring that it is complete and includes risks that have surfaced as a result of the pandemic, “such as disruptions that require the workforce to function remotely and the stability and sustainability of upstream supply chains and downstream customers.”
  • Workforce.  Given the impact of the crisis on the health and safety of employees, boards should enhance their oversight of workforce well-being by
    • reviewing periodic reports from management on actions the company is taking to ensure workforce health and safety, the status of worker health care coverage, and any plans for RIFs or comp reductions;
    • “Evaluating compensation programs to avoid ‘windfall’ grants (in which directors or officers receive an inflated number of shares at temporarily depressed prices); and
    • “Considering the perceived fairness of compensation programs during this time.”
  • Customers.  The authors suggest that boards confirm (without micromanaging) that management has the processes in place for communicating with customers and maintaining good customer relations by balancing the need for payment and contract enforcement against the need to help customers “get through this crisis.”
  • Investors. Although the level of board engagement with investors has generally increased, so have levels of hedge-fund activism, which may well be exacerbated by recent stock price declines.  In addition to monitoring disclosure of pandemic-related risks, the authors encourage boards to ensure that the company has a vigorous shareholder engagement program and to use the program to gain insights and feedback from institutional investors.
  • Role of the Corporation. While acknowledging that, in this crisis, survival is the paramount focus, the authors contend that, after the pandemic, the “emphasis on sustainability—that is, the company’s long-term impact on the well-being of multiple stakeholders, society at large, and the environment—will return even more strongly than before….[A] worldwide health crisis, which only emphasizes our shared vulnerability and interconnectedness, is likely to reinforce that trend. Boards would be well-advised during this time to think of how they and their companies will be viewed by all stakeholders once we emerge from this crisis.”


For guidance on other legal, regulatory and commercial implications of the COVID-19 pandemic, see our Cooley coronavirus resource hub.


Posted by Cydney Posner