The Board of Directors in Corporate Management

18 Oct The Board of Directors in Corporate Management

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In corporate management, the board of directors is the primary team, which is responsible for the entire company. The board decides on vision goals, mission, and objectives, and also weighs in with strategic planning, mergers and purchases operating budgets, capital budgets, compensation decisions and other issues. The board is responsible for the selection and firing of the CEO and setting executive pay rates and bonus payments, as well as profit sharing and employee stock options. Most boards are organized around committees that are focused on specific tasks. For instance, the audit committee works with the company’s auditors, while the compensation committee oversees issues such as salary rates and stock option grants.

The role of a Board is to serve as the corporate conscience, making sure that homework is done and that the criteria are thought through before being proposed for approval by management. Some presidents with a great sense of discipline use the board as a means to enforce quotas, other performance measures and to measure the performances of their subordinate executives.

Directors aren’t involved in the management decisions at a lower level, but they play a major role in the creation of big policies for a company. They make important decisions for the company, like closing facilities. They decide on how to invest the money of the business and set long-term goals in terms quality and growth, finances and employees. The board must also establish guidelines for its own behavior and address legal issues such as conflicts of interests, director independence, community benefit, and CEO evaluation.