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What is a Corporate Governance Committee?

Osmand Vitez
Osmand Vitez

Corporate governance is the framework of policies and procedures an organization will use to run its business operations. This governance ensures protection for individuals who are financially vested in the organization. A corporate governance committee is an extension of the organization’s management group as outlined by the corporate governance. Publicly held corporations are common users of governance, since shareholders own the company. These individuals need eyes and ears in the organization, which is the purpose for the corporate governance and its committees.

Organizations will often create an ongoing corporate governance committee with oversight for other committees. This overarching committee is known as the executive governance committee. It consists of several positions made up from directors and executive managers, although high-ranking operational managers can also have positions in this committee. The executive committee will often create other groups, such as a development, building, audit, and compensation committees.

Businessman with a briefcase
Businessman with a briefcase

A development corporate governance committee focuses on finding new opportunities for the organization to grow and expand operations. This committee will include individuals from several positions or roles in the company to ensure they have a wide range of experience and knowledge. Organizations benefit from this committee, as it often provides a fresh look into expanding the operations or the company.

A building committee will focus on the property management of a large organization. Many companies will create a secondary corporation that holds the land and buildings of the organization for legal purposes. This corporate governance committee is more internal in its scope, as the value of buildings and other facilities are typically a large portion of a company’s assets. Accounting may also be heavily involved in this group, as most organizations can depreciate their buildings or facilities for tax purposes.

An audit committee is an important corporate governance committee, especially for publicly held corporations. Publicly held companies must usually undergo several financial audits during their lifespans. Audits are both internal and external. Business owners and managers often use internal audits to make decisions and review operations. External audits are for shareholders, so they can assess the company’s financial health. The audit committee is responsible for setting up the audit process and ensuring the company remains compliant with current law.

Compensation committees review the money paid to executive-level management. These individuals often receive significant benefit packages, which can include stock, bonuses, or other perks. The compensation committee will receive the responsibilities of each position and determine if the wages and compensation packages are consistent with the industry standard.

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      Businessman with a briefcase