A board of directors is a elected group of people who represent the interests of a company. The board comprises the CEO, senior managers and other highly regarded individuals who are not directly involved in the day-to-day business activities. It is responsible for managing and establishing high-level strategies. It meets regularly to review and assess the performance of the company. It also approves major corporate transactions like mergers, acquisitions stock splits, new products that are launched. The board also establishes compensation policies for the CEO and other executives, assuring they are in line with company goals. It also manages risks, and oversees the financial performance and operations and the preparation of annual budgets as well as reports.
A strong board requires a variety of perspectives and a wide range of expertise. The best boards are highly active and proactive, taking on issues which could impact their company, such as strategic focus and culture, leadership succession and talent management, governance and risk, sustainability and digital transformation and possible mergers and acquisitions. They provide oversight and guidance on these issues while maintaining the crucial distinction between their role and that of management.
In order to fulfil their responsibilities and duties, the most effective board members work more closely with CEOs to understand the company's strategies goals, vision, and difficulties, as well risks and obstacles. They are ready to engage in a meaningful debate which focuses on strategic planning as well as oversight and accountability. They make decisions that are in the best interests of the company, while maintaining their independence and avoiding conflicts of interests.