A board of directors is a elected group of people who represent the interests of a company. The board is comprised of the CEO, senior managers, and other highly regarded individuals who aren’t involved in daily business operations. It sets high-level strategy and oversees management, meeting regularly to review performance and monitor the progress. It also approves major corporate transactions like mergers, acquisitions as well as stock splits and new product launches. The board also determines compensation policies for the CEO and other executives, assuring they are in line with organizational goals. It also manages risks and supervises the financial performance and operations and the preparation of annual budgets and reports.
A strong board requires a variety of perspectives and a broad range of expertise. The best boards are active and involved, addressing issues which could impact their business, including the importance of culture and strategic focus, leadership succession and management of talent, governance and risk, digital transformation and sustainability, and possible mergers and acquisitions. They provide the input and oversight needed to address these issues, while ensuring the vital distinction between their role as a board and that of management.
To perform their roles and responsibilities, the most effective board members work more closely with the CEO in order to comprehend the company’s mission and strategy as well as the challenges and risks. They are ready to engage in a thoughtful discussion that focuses on strategic planning, oversight and accountability. They also make decisions based on the company’s best interests while ensuring their independence and avoiding conflicts conflict of interest.
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