Sound-Up Governance

Each week, we will release two illustrated definitions of corporate governance jargon in order of increasing complexity. In this instalment we have the definition of "nomination". Check the episode thumbnail for an illustration by Nate Schmold.

Originally published Jun 2, 2023

What is Sound-Up Governance?

The real impact of corporate governance isn't about compliance or structure or policies, it's about the conditions that impact decision-making. Sound-Up Governance features fresh perspectives to help boards and executives to be a bit better tomorrow than they were yesterday.

Different boards have different levels of authority and freedom to choose who is eligible to be elected as directors. Nomination is just a word that means choosing who is eligible for election. These differences in authority are kinda interesting (in a boring sort of way).

Lots of boards just get to decide for themselves who to nominate. Sometimes they make a nominating committee to help.
Sometimes a shareholder or member can nominate themselves and then campaign to other shareholders/members for their votes.

Sometimes shareholders, especially really powerful ones like the government is to a government agency, can just tell the corporation who is going to be on the board.

In all of these cases, shareholders or members still always have the final say because they’re the ones who get to vote in the election. Even the ones that are just window-dressing.

Lots of boards have more than one director and lots of corporations have more than one shareholder or member. And part of the board’s job is to do stuff that shareholders and members will like. Director nomination is really important to corporate governance considering how much authority the board has in a corporation, So figuring out how nomination will work matters a lot. Who gets to decide who’s nominated? Who *should* be nominated? Should we prioritize skills? Experience? Representation of the Eyelash community? Streetwear aficionados? Tarantula handlers? Apple-shaped cake identifiers? Now we’re creeping into a new topic, which we’ll talk about in the next post.