A board of directors is an elected group of people who represent the interests of a business. The board is comprised of the chief executive officer (CEO), senior managers and prominent individuals who are not involved in day-today operations. It oversees management and sets high-level strategies. It meets regularly to review and assess performance. It also approves major corporate transactions, like mergers, acquisitions, stock splits, and new launches of products. The board also decides on guidelines for compensation for the CEO, other executives and ensures that they are in line with the organization’s goals. It also manages risk and supervises financial and operational performance including the preparation of annual budgets and reporting.
A successful board requires diverse perspectives and a wide range of expertise. The best boards are active and involved, addressing issues which could impact their business, such as the importance of culture and strategic focus as well as succession of leadership and talent management, governance and risk, sustainability and digital transformation, and mergers and acquisitions that could be in the near future. They provide input and oversight on these issues, while ensuring the vital distinction between their role as a board and that of management.
To carry out their duties and responsibilities effectively most efficient board members work closely with the CEO to understand the company’s strategy and vision and the challenges and risks. They are prepared to engage in meaningful discussions that is focused on strategic planning as well as oversight and accountability. They also make decisions in the best interests of the company’s interests while maintaining the independence of the company and avoiding conflicts of interest.