Corporate Governance and Ethical Standards Flashcards

Which of the following BEST describes a 'tone at the top' in compliance governance?

Answer: Senior leadership's demonstrated commitment to ethical conduct and compliance

Tone at the top refers to senior leadership visibly modeling and reinforcing ethical behavior and compliance culture.

Under the Business Judgment Rule, courts generally will NOT second-guess board decisions if directors acted with:

Answer: Good faith, informed basis, and honest belief the action was in the company's best interest

The Business Judgment Rule protects directors who acted in good faith, on an informed basis, and with an honest belief in the company's best interest.

What is the primary purpose of a Board Skills Matrix?

Answer: To identify gaps in collective board competencies

A skills matrix maps existing board competencies against needed expertise to identify gaps for recruitment purposes.

Which ethical theory holds that the morality of an action is determined solely by its consequences?

Answer: Consequentialism

Consequentialism (including utilitarianism) judges actions as right or wrong based on their outcomes.

A whistleblower policy MUST include which of the following to be effective?

Answer: Non-retaliation protections for good-faith reporters

Effective whistleblower policies must protect reporters from retaliation to encourage good-faith reporting.

The concept of 'say on pay' allows shareholders to:

Answer: Vote on executive compensation packages, typically in an advisory capacity

Say on pay is typically an advisory shareholder vote on executive compensation disclosures, required by Dodd-Frank for public companies.

Which governance document typically defines the purpose, authority, and responsibilities of a board committee?

Answer: Committee charter

A committee charter formally defines the committee's mandate, composition requirements, meeting frequency, and key responsibilities.