A board of directors is a set of shareholders who elect members to represent the interests of the business. The board is comprised of the chief executive officer (CEO) and senior managers and eminent individuals who are not involved in day-today operations. It establishes high-level strategies and oversees management, meeting regularly to review performance and track the progress. It also approves major corporate transactions like mergers, purchases, stock splits and new product launches. The board also decides on the compensation policies for the CEO as well as other executives and ensures that they are in line with the organization’s goals. It also manages risks and oversees the financial performance and operations including the creation of annual budgets and reports.
A successful board requires diversification of viewpoints and expertise. The most effective boards are engaged and proactive in addressing issues that could impact their businesses, such as strategic focus and culture, succession of leadership as well as governance, talent management and resilience, risk, digital transformation, sustainability as well as potential mergers and acquisitions. They provide oversight and insight on these issues while preserving the essential distinction between their role and that of management.
To fulfill their roles and responsibilities effectively most effective board members work more closely with the CEO to understand the company’s goals and strategies, as well as the risks and challenges. They are able to participate in a productive discussion which focuses on strategic planning and oversight, as well as accountability. They make decisions that are in the best interests of the business, while ensuring their independence and avoiding conflict of interest.
www.managingbiz.net/2020/07/29/managing-director-tasks-and-duties-by-board-room/
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