A Meeting of the Minds: How Do Companies Distribute Knowledge and Workload Across Board Committees?

Abstract

Corporate governance experts pay considerable attention to the composition of the full board of directors. And yet, much of the substantive work of the board is carried out by committee.

While the nominating and governance committee, in consultation with the chairman or lead independent director, are responsible for recommending committee assignments, there is some degree of opacity to the process. In particular, it is not clear what consideration they give to the distribution of knowledge and workload across committee appointments. We examine this issue in greater detail, and ask: 1. How exactly do companies decide which directors to assign to each committee? 2. Do they intentionally create overlaps across committees to facilitate knowledge sharing, or do overlaps occur randomly? 3. Do leaders of the board monitor the “busyness” of individual directors? 4. How can the board ensure that the benefits of information sharing are not outweighed by excessive workload?

The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.

Keywords: board of directors, board committees, board committee overlap, board committees and shared knowledge, corporate governance

JEL Classification: G3, G30, G34