board performance issues

In a publicly traded company the board of the company is the group of people who decide what the corporation does and the reasons for it. The shareholders (owners) elect its members to represent and safeguard their interests. The board hires the executives who oversee 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 establishes guidelines for dividends and payouts, approves or denies the hiring or firing of managers at the top and changes corporate rules and conducts the annual shareholders’ conference.

The board is typically comprised of both inside directors as well as outside directors. The chairman of the board preside over meetings, establishes agendas and delegates tasks to the members. There are boards that have standing committees like the audit and compensation committees. These committees are usually required by law or are listed on the stock exchange.

Boards have to balance the need review detailed information on a regular basis and their responsibility to concentrate on the big picture and not on day-today management. It is vital for a board to understand what duties it is required and wishes to carry out on its own, and which responsibilities it can delegate. Boards often create an outline of reserved powers to clearly define which duties are the sole responsibility of the board, and those that are delegated to senior management.