Judge how well a company's governance policies and practices work

Judge governance by whether it protects all shareholders in practice, not by labels. Useful checks: the share of genuinely independent directors (recent former executives or relatives do not count); whether the chair and chief executive roles are separated; the composition of audit, remuneration and nomination committees; the handling of related-party transactions, ideally reviewed by independent directors; whether pay is linked to long-term returns rather than size or revenue; voting rights, including dual-class structures and staggered boards; and shareholders' legal remedies. Weaknesses reinforce each other: a controlling family with a captive audit committee and unreviewed purchases from family firms is a serious concern. The trap is accepting a company's own classification of director independence.