Board of Directors (B of D)
Candlefocus EditorThe primary role of the Board of Directors is to ensure that the shareholders’ best interests are met, often through their ability to set the company’s goals, hire and fire top executives, approve major financial decisions and assess the overall performance of the company. The Board also provides guidance to management and acts as a check and balance on the management team. In this way, the Board of Directors is responsible for the overall success of the company, while the executive team is responsible for the implementation of Board decisions.
The Board of Directors of a publicly traded company is usually composed of a mix of internal and external elements, including executive officers of the company, external advisors and independent directors. The number of Board members depends on the size of the company, but generally ranges from three to fifteen. Independent directors are not directly affiliated with the company and generally take a more objective stance on company issues. The New York Stock Exchange and the Nasdaq require listed companies to have a majority of independent directors as part of their Board.
The Board of Directors has the power to make critical decisions for the company, including approving financial plans, merging and acquisitions, choosing auditors and approving the dividend policy. The Board is ultimately accountable for the company’s success or failure, and their decisions can have long-term effects on the company’s future.
The Board of Directors is a critical decision-making body for any organization, public or private. The Board sets the overall direction of the company and is ultimately responsible for its success or failure. The selection of qualified and experienced Board members is essential to the future of any company.