Corporate leadership efforts in 2025 will be impacted by a series of unconventional developments.
A series of unconventional developments may impact corporate governance and leadership initiatives in 2025. These extend beyond the usual topics such as shareholder activism, cybersecurity, regulatory enforcement, and ESG. Rather, they reflect a tier of unique ethical, economic, technology, global and political concerns poised to affect boardmembers in significant and perhaps unanticipated ways.
1. Addressing Continued Volatility. Directors must confront the implications of continued political, social, global, economic and regulatory volatility. This will be driven in part by the prospect of significant change in federal policies and programs, including tariffs, government efficiency and immigration. It may also reflect broader concerns with economic growth; international conflict and continued societal fragmentation. To address these challenges will require directors to exercise heightened attentiveness and closer interaction with management.
2. Board Oversight of AI. New recommendations from the National Association of Corporate Directors provide a strong platform from which the board of directors may formalize its oversight of artificial intelligence and related technology. This would include internal structures for board education, monitoring, risk prevention and regulatory compliance. Boards will also need to confront internal philosophical disputes between the benefits of AI and the speed with which it should be implemented, and the risks of AI and its responsible deployment.
3. Pressure on the Board/Management Dynamic. Directors and executives will need to reconfirm their respective roles and relationships in order to reduce the potential for internal tension. This, as increasing pressures on directors to become more engaged clash with related concerns of executives with board micromanagement. Clarity will be sought on the lines of decision-making, to avoid disagreement and dispute over what is properly the responsibility of the board, and what is properly the responsibility of management.
4. Intra-Board Collegiality. Increasing concerns with governance effectiveness will motivate boards to confront barriers to intra-board collegiality and supportive behavior. This may include re-evaluating ground rules for the conduct of board business; activating all board voices in support of constructive discussions; helping the board withstand stress and discord within the context of disagreement; setting clear expectations for director conduct; enforcing existing board codes of conduct, and helping attract and retain top board talent.
5. Boardmember Commitment. Directors should anticipate renewed scrutiny of their individual ability to commit the necessary amount of time and energy to their board duties. Influential third party groups are encouraging a new, more structured approach to director engagement, particularly as it may apply to overcommitted directors. This approach often incorporates both a requirement that company directors only serve on a certain number of outside boards, as well as a process to confirm annual compliance with such a service limitation.
6. CEO Succession Protocols. The dramatic increase in CEO turnover will focus particular attention on the adequacy of board oversight of executive succession practices. Attention will be drawn to factors such as the existence of a standing succession committee and its composition; the availability of outside search firm resources; up-to-date evaluation matrices; a compensation and benefits framework; the process for considering internal candidates, including those from the board; and the existence of emergency succession protocols.
7. Conflicts of Interest Policies. Judicial decisions, media reports and third party ethics and contracting standards will combine to prompt leadership to assure the effectiveness of existing conflicts of interest policies. Particular focus will extend to the scope of disclosure (financial and nonfinancial interests); formal standards of review; the independence of the review process; policy application to “potential” as well as “actual” conflicts; policy enforcement; and limitations on both policy waivers and on conflicts management plans.
8. Board Composition and Refreshment. Notable new data will encourage boards and their nominating committees to adopt a board composition philosophy that is long term in nature, to better assure the availability of core competencies to address challenges into the future. Such efforts may include greater emphasis on critical director qualifications, such as business strategy experience; depersonalized director succession planning; targeted use of age and term limits; discrete application of “offboarding” mechanisms; and “fitness to serve” policies.
9. Corporate Compliance Challenges. Boards will face unique challenges to their oversight of corporate compliance should the new administration shift its law enforcement focus away from corporate prosecutions and criminal sanctions against corporations. The expectation of relaxed white collar regulation may require additional board commitment to maintain appropriate levels of compliance oversight, resources and practices. Delaware courts are unlikely to relax their own Caremark oversight standards for officers and directors.
10. Workforce Culture Concerns. The preservation of a positive workforce culture - an important corporate asset - will require the renewed attention of corporate boards. This, given increasing political pressures on corporate support of diversity, equity and inclusion policies, and lingering barriers to gender equity progress. Corporate leaders will be called upon to overcome self-satisfaction with progress made in the advancement of gender parity for women, especially those in senior and middle management.
