Essential Reading List - BoD

Question 1

What is a board of directors?

Answer 1

In a private company, a board of directors is a group of elected individuals representing the shareholders.

In a non-profit organisation, a board of directors is the governing body focussed on the organisation’s high-level strategy, oversight, and accountability.

Question 2

What does a board of directors do?

Answer 2

1.is a trusted advisor (fiduciary) on behalf of shareholders.
2.The hiring and firing of senior executives, dividend policies, options policies, and executive compensation are the main issues under a board’s remit.
3.also ensures the company has sufficient, well-managed resources at its disposal while also helping it set broad goals and supporting the executive team’s responsibilities.

Question 3

internal and external non-executive directors

Answer 3

Internal directors have the interests of significant shareholders, executive managers, and employees in mind, and their expertise within the organisation should add value.he average internal director does not typically receive compensation

Outside directors, or non-executive directors, do not take part in any of the company’s daily operations and are often paid extra for attending committee meetings.

Question 4

Members

Answer 4

A board can have any number of members; however, most have between three and fifteen members. Some believe the optimal size is nine.

Nine years is considered the most time a director should sit on a particular board.

Question 5

Types of Boards

Answer 5

executive boards The executive board is responsible for the day-to-day operations of the business.

supervisory boards:These directors are not involved in the day-to-day running of the business but are there to advise on strategy and the organisation’s overall direction

Question 6

Board Positions

Answer 6

Chair of the board
Vice-chair
Secretary
Treasurer
Board members and non-executive directors

Question 7

Key Take-aways

Answer 7

Directors are elected to represent shareholders’ interests.
In most organisations, internal board members are not paid for their work, but outside board members (non-executive directors or NEDs) are.
Board members determine board policies, dividend payouts, executive compensation and executive recruitment.
An individual is likely to be removed from a board if they violate foundational rules, for instance, if they engage in a conflict of interest transaction or strike a deal with a third party to influence board decisions.
Directors are elected by shareholders but nominated by the nominations committee.