by Sharon Parsley, JD, MBA, CHC, CHRC
Participation on a corporate board or a board committee responsible for oversight of a compliance and
ethics program (referred to in this article
as a “Committee”) can be an extremely
rewarding experience. With that
said, the expectations, obligations,
and the duties to the enterprise
borne by a Committee member
are considerable. Additionally,
current enforcement trends, at
least arguably, expose Committee
members to increased scrutiny and
the possibility of personal liability
for corporate malfeasance, nonfeasance,
Without question, board and Committee
members are fiduciaries to the enterprise
they serve and are, as a result, held to a high
standard of conduct. Any fiduciary role is
widely held to impose both a duty of care
and a duty of loyalty upon the individual
serving as a fiduciary. The duty of care1
obligates a Committee member to act in a
well-informed, diligent, and careful manner.
The duty of loyalty2 requires a Committee
member to act in the best interests of the
enterprise, even where it may impair an
interest of the individual Committee member.
Committees take on a unique dynamic and
personality. Each is as distinct as the enterprise
and compliance and ethics program that the
Committee is responsible to oversee. This article
attempts to outline some practical suggestions
to enhance the oversight experience for those
currently serving on Committees, those who
seek to make meaningful contributions to
Committees in the future, and the operational
and control function executives (e.g., financial
officers, audit executives, and compliance
officers) who interact with the Committees.
1. Size and composition: Committees must
be large enough to ensure diversity of
membership, skill, and experience yet small
enough to remain efficient. A six-member
Committee is frequently large enough to
mitigate risks associated with quorum
failure, while remaining small enough to
deliberate on issues and make decisions
2. Independence and competencies:
Committee membership should consist of
individuals with practical experience from
distinct yet complementary disciplines.
Board committee best
» Committees responsible for compliance and ethics program oversight have considerable responsibility to the organization.
» The duties of care and loyalty are imposed on each committee member.
» Optimal committee composition includes members having diverse skill and experience.
» The committee charter must be clear and concise and should be regularly reviewed and updated.
» Committees, in particular the committee chairperson, should cultivate a relationship with control function executives.