In a publicly-traded corporation, the board is the body that http://www.artboardroom.com/is-your-board-efficient/ decides what the business does. The shareholders (owners) elect the members to represent and safeguard their interests. The board appoints the executives who manage the day-to day operations in accordance with the board’s directives.
The primary function of the board is to ensure that the assets of shareholders and investors aren’t at risk. It formulates guidelines for dividends and payouts, appoints or disapproves the hiring or dismissal of managers at the highest level, changes corporate rules, and holds the annual shareholders’ meeting.
Typically, the board is composed of inside directors who serve as officers of the company, and outside directors who do not hold executive post. The chairman of the board is the one who presides over meetings, sets agendas and assigns duties among the board members. Some boards also have standing committees such as the audit and compensation committees. These committees are usually required by law or are listed on the stock exchange.
Boards must keep a healthy balance between the need to review information in detail on a regular basis and their responsibility to focus not only on day-today activities but also on the bigger picture. It is also crucial that a board understand the specific tasks it is required to and wants to perform on its own and which ones it should delegate to senior management. Boards often create the list of reserved powers to clearly define what tasks are the sole responsibility of the board and which ones can be delegated to the senior management.
