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Exam: NACD Directorship Certification
Format: Online- proctored exam (multiple-choice and scenario-based questions).
Duration: 2 hours.
Passing Score: 70% or higher (exact threshold may vary).
Multiple-Choice (Single & Multiple Select)
Scenario-Based Questions (Real-world governance dilemmas)

- Monitor reputational risk to the organization (for example- allegations of board- officer- director- and/or employee misconduct; the organizations social responsibility practices; and etc.).
- Review the effectiveness of crisis-management plans (including business continuity plans- cybersecurity plans- etc.).
- Review Code of Conduct and whistleblower policies.
- Monitor compliance with Code of Conduct and whistleblower policies- reports- and disposition.
- Define the roles and responsibilities of the board- board chair- chief executive officer (CEO)- and management.
- Monitor managements performance against agreed upon financial objectives.
- Monitor managements performance against agreed upon nonfinancial objectives (for example- workforce diversity- equity- and inclusion (DE&I); corporate culture; employee engagement; and etc.).
- Assess/benchmark- approve- and monitor agreed-upon key performance indicators (KPIs) and corrective actions.
- Assess the effectiveness of internal controls.
- Monitor CEO engagement with stakeholders (such as shareholders- employees- customers- and community).
- Review and monitor regulations and associated compliance programs.
- Review and approve the recommendations of the audit.
- Knowledge of typical components of an organizations code of conduct
- Knowledge of the roles of external advisors to the board (e.g.- compensation consultant- external auditor- outside counsel- etc.)
- Knowledge of the proxy voting process
- Knowledge of the legal implications of shareholder communications
- Knowledge of the investor-relations function
- Knowledge of the boards role in shareholder engagement and communication
- Knowledge of the audit process (including roles and responsibilities of audit committees- external auditors- internal auditors- etc.)
- Knowledge of required disclosures to investors
- Knowledge of regulatory bodies and processes impacting an industry
- Knowledge of organization valuations (such as book value- intrinsic value- discounted cash flow- comparable multiples- etc.)
- Knowledge of nonfinancial business performance metrics
- Knowledge of key performance indicators and benchmarks and their use by the board in assessing management performance
- Knowledge of financial statements
- Knowledge of emerging cybersecurity threats
- Ability to assess the strategic synergy between potential M&A targets and the organization
- Ability to assess the organizations competition
- Ability to assess the alignment between the organizations mission- values- and strategy
- Ability to assess and interpret financial statements
- Ability to assess an organizations performance against that of peer groups and goals
- Knowledge of various organizational structures (functional- divisional- matrix- etc.)
- Ability to provide independent thought leadership

- Conduct overall board performance evaluation.
- Conduct peer-to-peer board member exams.
- Conduct self-assessment of own performance on the board.
- Encourage an inclusive- ethical- and collaborative board culture.
- Develop a board succession/refreshment plan based on a skills matrix that is aligned with the strategy.
- Set expectations for continuous board education.
- Review and conduct an onboarding process for new board members.
- Review and conduct nominations and refreshment processes for board members- board officers- committee members- and committee chairs.
- Review and update board policies- committee charters- and bylaws.
- Practice fiduciary responsibilities of board members (including Duty of Care and Duty of Loyalty).

- Knowledge of US and international regulatory issues (such as the Foreign Corrupt Practices Act (FCPA) and United Kingdom (UK) Bribery Act)
- Knowledge of types (Sides A- B- and C) and risk coverage provided by Directors & Officers (D&O) liability insurance
- Knowledge of the different responsibilities of the board- board chair- CEO- and management team
- Knowledge of fiduciary responsibilities of boards and board members (Duty of Care- Duty of Loyalty)
- Skill in developing mutual trust and respect between board members and management
- Ability to respond appropriately to misconduct
- Ability to contribute productively to the board evaluation process
- Knowledge of the Business Judgment Rule
- Ability to prepare and contribute to board discussions and decisions
- Ability to promote and engage in continuing board education
- Ability to objectively assess the directors own board performance
- Ability to objectively assess overall board and committee performance
- Ability to objectively assess fellow board members board performance
- Ability to establish nomination and onboarding processes
- Ability to effectively listen to and engage with other board directors
- Ability to develop a board succession plan
- Ability to contribute to an inclusive- ethical- and collaborative board culture

- Review the board pack prior to board meetings.
- Prepare questions and actively participate in board meetings based on materials provided- presentations- and board discussion.
- Review- discuss- and approve major management recommendations (such as mergers and acquisitions (M&A)- dividend policies- capital expenditures- restructuring- and changes in capital structure).
- Review and update the directors and officers (D&O)- errors and omissions (E&O)- and other insurance policies / coverages- and indemnification agreements.
- Encourage an environment of openness and dialogue between management and the board.

- Knowledge of potential disruptive risks (e.g.- anything that has a significant effect on an organizations revenues- profits- competitive position- or reputation)
- Ability to interpret and synthesize information provided by management
- Ability to identify issues that could impact the reputation of the organization
- Ability to assess the cultural health of an organization
- Ability to assess opportunities and risks associated with a proposed M&A transaction
- Ability to assess managements human capital strategy
- Ability to assess effectiveness of the organizations management of regulatory risk
- Ability to assess crisis management plans (including business continuity plans- cybersecurity incident response plans- etc.)
- Ability to assess the effectiveness of an organizations DE&I programs

- Evaluate and approve the companys strategic plan.
- Monitor progress toward the strategic plan objectives.
- Review and evaluate enterprise risk exam- mitigation- strategy- and response.
- Review and approve the organizations risk appetite.

- Knowledge of change-management strategies and processes
- Knowledge of strategy development and execution process
- Knowledge of M&A strategy and execution
- Ability to assess the proposed execution of a strategic plan
- Ability to assess the effectiveness of leadership in driving change
- Ability to ensure alignment between short-term and long-term objectives
- Ability to assess whether a change in organizational strategy is needed
- Ability to evaluate the organizations risk appetite
- Ability to evaluate the effectiveness of risk-mitigation plans
- Ability to identify strengths- weaknesses- opportunities- and threats (SWOT) and their potential impact on the company

- Select- hire- and (if necessary) terminate the CEO.
- Review and discuss succession planning for the organizations leadership.
- Evaluate the performance of the CEO and other named executive officers.
- Review and provide oversight of the organizations human-capital strategy.
- Determine the organizations executive total-compensation philosophy (base salary/ incentives/benefits/perks).
- Approve the compensation plan design and incentive payouts for the CEO and executive officers.
- Conduct executive sessions and provide CEO feedback.

- Knowledge of CEO recruitment and succession-planning process
- Ability to contribute to effective CEO succession planning
- Ability to assess the performance of the CEO against defined objectives and metrics
- Ability to assess the leadership pipeline
- Ability to assess and interpret executive pay plan design and payout decisions
- Ability to provide candid feedback to the CEO and executive team
- Ability to suggest/guide professional growth and development opportunities to the CEO and executive team
- Knowledge of elements of executive total compensation (base salary/incentives/benefits/perks)
- Ability to identify inappropriate behavior within the organization

Domain 1: Board Composition & Governance
Board structure- independence- and diversity
Director recruitment- onboarding- and evaluations
Committee roles (Audit- Compensation- Nominating & Governance)

Domain 2: Strategy & Risk Oversight
Role of the board in strategic planning
Risk identification- exam- and mitigation
Crisis management and cybersecurity oversight

Domain 3: Financial & Audit Oversight
Financial literacy for directors
Internal controls and audit committee responsibilities
Regulatory compliance (SOX- SEC- FASB standards)

Domain 4: CEO & Executive Compensation
CEO succession planning
Executive compensation alignment with performance
Shareholder engagement on pay equity

Domain 5: Stakeholder & Ethical Governance
ESG (Environmental- Social- Governance) oversight
Shareholder activism and engagement
Corporate culture and ethics compliance