Directors Briefing: New year, new time to revisit board governance

By Samantha Kirby

As the new year unfolds and a new administration takes charge, it’s a good time for bank boards of directors to reassess their corporate governance practices, said Samantha Kirby, partner and chair of the financial services practice at Goodwin.

“Over the past 10 to 15 years, the pendulum has swung in terms of attitudes toward corporate governance,” she said in an interview. A detailed, check-the-box approach to governance after the Great Recession gave way to a more principles-based framework, which has since reverted to a more prescriptive approach post-March 2023. “The change in administration could mean we will go back to a more principles-based approach,” she said.

Kirby also emphasized that governance is an ongoing process, not a one-time exercise. “The idea is not to get your charter out once a year, look at it and stick it back in the drawer,” she said. Regular reviews of governance practices are essential to adapting to an evolving regulatory landscape. In this shifting terrain, Kirby advises bank boards to stay on top of current expectations regarding corporate governance practices to ensure optimal functionality and accountability, and to help mitigate director liability, reducing personal risks for board members.

Succession planning is another pressing issue, especially given the increased awareness of liability risks in the wake of recent banking crises. Kirby stressed the importance of building a strong pipeline of future directors whose experience reflects both the communities served and the range of skills necessary for effective decision-making.

Hear more from Samantha Kirby at the ABA Conference for Community Bankers in Phoenix, Feb. 16-18. She will be speaking Sunday, Feb.16, at a session on board governance.