The boardroom's quiet revolution

In the past 10 years, under pressure from shareholders, stock exchanges, and state and federal governments, corporate boards have changed dramatically. For example, regulations require that a majority of directors be independent; independent directors regularly meet in executive sessions without the CEO; shareholders can review decisions by the compensation committee; and directors are required to attend meetings more often. But externally driven reforms have proved rather ineffectual when it comes to improving boards' managerial oversight. The authors interviewed two dozen directors from the boards they most admire and coupled the directors' insights with their own broad experience leading, serving on, and counseling boards. They present some striking innovations in four main categories: strategy and talent oversight, board composition, the quality of board discussions, and the board's relationship with the CEO. These innovations can help boards dramatically improve the governance of their enterprises.