The Strategic Use of Corporate Board Committees

Abstract

Much recent attention has been focused on committees of corporate boards of directors—particularly the audit, compensation, and nominating committees—as mechanisms for monitoring management and protecting shareholder interests. Board committees can also serve strategic purposes for the firm. This article discusses some of the strategic uses of board committees and focuses on their role in maintaining corporate legitimacy, protecting directors from excessive exposure to liability, and contributing to the formulation of corporate strategy. In particular, it examines the role of the board's strategy committee.