What if a monitoring report shows non-compliance?
Non-compliance or, put more pointedly, failure to demonstrate that a reasonable interpretation of board policy has been achieved is an important event, decided by a vote of the board as to whether board members found both the CEO’s interpretation and submitted data convincing. The Policy Governance model does not dictate what a board then does, except that it cannot ignore the non-compliance. In some instances, the board’s best judgment would be to declare the non-compliance, but take no disciplinary action unless the non-compliance continues. In other instances, immediate firing of the CEO might be best. And there any number of options between. It is possible, of course, that the board having had its attention drawn to the policy being monitored will choose to change the policy. But policy change is a separate issue and never to be done simply because of non-compliance, but only due to an actual change in the board’s values about the matter.
