Corporate Governance: Board Effectiveness and Shareholder Concerns

During a recent annual general meeting, shareholders of a publicly traded corporation criticized the board of directors for its lack of diversity and questioned their decisions regarding executive compensation structures. In response, the board explained their rationale for the current structures, claiming they were aligned with market standards and had been designed to drive long-term performance. The shareholders, however, argued that these practices may encourage excessive risk-taking, which could jeopardize the firm's stability.

In light of corporate governance principles, which of the following actions taken by the board demonstrates effective governance in addressing shareholder concerns and improving board effectiveness?