Topics to Consider for Your Next Board Meeting

Boards are in a prime position to assist their organizations by asking questions that help management evaluate risks, identify opportunities, and consider varying perspectives when making meaningful decisions. Take advantage of each board meeting cycle and capitalize on the time and agenda by discussing and collaborating on today’s evolving business risks and strategies for tomorrow. Weaver, knowledgeable in advisory services, offers several topics to incorporate into the discussions at your next board and committee meetings to generate productive discussion and illuminate prospective opportunities as well as challenges.

1. Is our organization prepared to comply with privacy regulations?

Iowa recently became the sixth state to adopt strict data privacy regulations for consumers, joining California, Colorado, Connecticut, Utah, and Virginia. As companies adjust their practices to comply with regulations in these states, organizations will inevitably need to review and adjust their practices across their footprint. It’s critical to ensure your organization is aware of all such regulations that apply to your business, customer information, reporting standards, and more, and that clear plans of action are in place to be prepared to meet these regulations.

• What has our organization done to date to evaluate our data security practices and the impact to our operations and privacy program based on these new state laws?
• What were the findings of our reviews and what is the roadmap to ensure we are in compliance by the time the law goes into effect?
• What communications are required with our customers regarding a clear privacy notice that includes categories of data processed, the rights of our customers and other elements of the regulations?
• What updates will we be receiving on a regular basis to monitor our progress?
• What are management’s biggest concerns and challenges with addressing these forthcoming requirements?

2. Has the organization reviewed key risks for our critical third-party vendors, suppliers or business partners?

Third party vendors are an important component of success for many businesses. Outsourcing may reduce an organization’s internal workload, but it does not reduce the risk associated with those activities. Whether providing support for new technologies, using contract labor to align resource needs with the business demands, or leveraging hybrid insource/outsource models to reduce costs, these relationships are an important part of the company’s risk landscape.

Weaver has provided insights on managing third party vendors to assist in evaluating relationships with existing third-party vendors.

Here are some questions to examine how third-party risks may affect your organization:

• Has management evaluated the viability of suppliers and key vendors in the current business climate? 
• What is our due diligence process for third-party agents?
• What tools and applications are we using to manage vendor relationships?
• Could our business be interrupted by problems facing these critical vendors? 
• Should we be exploring alternative vendors as backups if such a situation arises?

3. What is the board’s role in protecting the organization against cybersecurity threats?

Even if an organization has invested millions in a cybersecurity program, constant threats mean board members need to stay informed and get the right information from management in order to stay on top of the situation. Leading organizations are receiving recurring updates on key performance indicators related to cybersecurity through the use of dashboards and other aides to inform and provide insights to the Board.

Here are some questions ask regarding cybersecurity program performance and effectiveness:

• Is the cybersecurity update being presented by management tailored to both Directors with cybersecurity experience, as well as Directors with non-IT backgrounds? Are the nuances and risks being presented to the Board easy to understand?
• What key performance indicators are available to the Board, and at what frequency are these being presented for discussion?
• Has senior management benchmarked the organization’s cyber program and performance against peers and other available cyber program surveys?
• Does our organization’s cybersecurity program cover the full range of technology threats?
• Does the organization have a cybersecurity roadmap to continue mitigating cyber risks?
• What, if any, cybersecurity or information security requirements must we comply with based on our contracts, customer relationships, or other considerations? What is our status on meeting these requirements, including the adoption of any widely accepted frameworks?

4. Is the company considering any stock repurchases?

The Inflation Reduction Act of 2022 imposes many far-reaching changes, including a new 1% excise tax on the fair market value of stock buybacks. This excise tax applies to domestic corporations whose stock is traded on an established market and such buyback over the course of the tax year exceeds $1 million. Also, this excise tax applies to repurchases beginning after December 31, 2022. 

Generally, a repurchase for purposes of this excise tax is (i) any corporate acquisition of stock from a shareholder in exchange for property other than stock of the corporation or (ii) any other economically similar transaction as determined by Treasury. It does not matter whether the reacquired stock is held as treasury stock, cancelled or retired for purposes of a repurchase.

Here are some questions to ask about upcoming company stock repurchase plans:

• Is the company considering any preferred stock redemptions?
• Is the company considering any transactions such as leveraged buyouts, acquisitive reorganizations, single-company reorganizations, recapitalizations or split-offs?
• Is the company considering issuing stock during the same year as a buyback?

Weaver offers information and insights about the Inflation Reduction Act of 2022 and other topics to prepare for your next board meeting. We can help you ask the right questions and determine appropriate plans of action based on topics and trends as they unfold. Subscribe to our monthly insights for articles and information to help you review your organization’s operations and prepare for change in an uncertain world. Contact us for information about these areas of Board governance.

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