The board of directors in corporate management is the final team that accepts overall responsibility for a business. The board is the one who decides on vision goals, mission, and objectives and also weighs in with strategic planning, mergers and purchases, operating budgets, capital budgets, compensation plans, and many other issues. The board is also responsible for appointing and dismissing the CEO and for setting executive pay rates as well as bonuses, profit sharing and employee stock options. Most boards are organized around committees that concentrate on specific functions. The audit committee, for instance works with the company’s auditors. The compensation committee is responsible for issues like salary and stock options.
The board is the primary source of conscience of an organization. They ensure that all homework is completed and that the criteria are carefully analyzed prior to being presented to management for approval. Some presidents with a keen sense of discipline utilize the board to enforce the quotas as well as other performance measures for their executives who are subordinate to them, and they evaluate the performance of their own directors by comparing them to the pre-defined standards.
Directors are not part of the low-level management decisions but they play a significant role in establishing the major guidelines for a company. They make decisions that have a huge impact on the company such as closing facilities, for instance. They decide where to invest the company’s cash, and they establish boards of directors structure long-term goals for growth, quality finance, people and quality. The board must also establish guidelines for its conduct and address legal issues like conflicts directors’ independence, conflicts of interest, community benefits, and the evaluation of the CEO.