A board of directors is an elected group of individuals who represent the interests of a company. The board comprises the CEO, senior managers and other prominent people who are not involved with the day-to-day business activities. It establishes high-level strategies and supervises management, and meets regularly to review performance and track the progress. It also approves major corporate transactions, including mergers, purchases, stock splits, and new launches of products. The board also sets policies on compensation for the CEO and other executives, ensuring they are in line with company goals. It also manages risk and supervises the performance of operations and financials which includes preparing annual budgets and reports.
A great board requires an array of perspectives and expertise. The best boards are highly proactive and engaged, addressing issues that could affect their business, such as strategic focus and culture as well as succession of leadership and talent management governance and risk, digital transformation and sustainability, and the possibility of mergers and acquisitions. They provide oversight and insight on these topics while maintaining the vital distinction between their responsibilities and those of management.
To carry out their duties and responsibilities effectively, most efficient board members work closely with the duties by board room CEO, allowing them to better understand the company’s vision and strategy as well as the risks and challenges. They are prepared to engage in meaningful discussions that focuses on strategic plan as well as oversight and accountability. They also make decisions according to the company’s best interests while ensuring independence and avoiding conflicts interests.