BOARD OF DIRECTORS

Functions, Responsibilities, Selection Criteria & Roles.

BOARD OF DIRECTORS
DEFINATION

Group of people legally and morally charged with the responsibility to govern an organization

BOARD OF DIRECTORS TYPE OF MEMBERS

INSIDE DIRECTORS

Management directors Officers or executives employed by corporation

OUTSIDE DIRECTORS

Non-management directors May be executives of other firms but not employed by boards corporation

BOARD FUNCTIONS & RESPONSIBILITIES

Setting corporate strategy, overall direction, mission or vision. Hiring and firing the CEO and top management.

Controlling, monitoring, or supervising, top management.

Reviewing and approving the use of resources. Caring for shareholder interests.

Assess Its own Performance.

Enhance the Organizations Public Image.

CRITERIA FOR SELECTION OF BOARD DIRECTORS

Willing to challenge management.

Special expertise. Availability for advice and meetings.

Expertise on global issues.

Understands key technologies. External contacts valuable to the firm. Detailed knowledge of industry. High visibility in field. Accomplished in representing firm to stakeholders.

THE ROLE OF THE BOARD OF DIRECTORS

Based on the degree of involvement the board role is to carry out three basic tasks:
1) Monitoring Monitor developments inside and outside the corporation. 2) Evaluate & Influence -- Review proposals, advise, provide suggestions and alternatives. 3) Initiate & Determine -- Delineate corporations mission and specify strategic options.

THE ROLE OF THE BOARD OF DIRECTORS (contd.)

Represent value.

shareholders

and

create

shareholder

Align the interests of management with those of shareholders while protecting the interests of other stakeholders (customers, creditors, suppliers). Define the companys mission and goals. Establish or approve strategic plans and decisions to achieve these goals. Appoint senior executives to manage the company in accordance with the established strategies, plans, policies, and procedures.

THE ROLE OF THE BOARD OF DIRECTORS (contd.)

Approve major business transactions and corporate plans, decisions, and actions according to the bylaws.
Develop and approve executive compensation, pension, post-retirement benefits plan, and other long-term benefits, including stock ownership and stock options. Review financial reports, including audited annual financial statements, quarterly reviewed financial statements, and other important financial disclosures such as management discussion and analysis. Review managements report on the effectiveness of internal control over financial reporting.

THE ROLE OF THE BOARD OF DIRECTORS (contd.)

Provide counsel to the companys senior executives, especially the CEO, on material strategic decisions and risk management. Ensure the companys compliance with applicable laws, rules, and regulations. Approve the companys financial activities. major operating, investing, and

Set the tone at the top by promoting legal and ethical conduct throughout the company. Evaluate the performance of the board, its committees (e.g., audit, compensation, and nominating), and the members of each committee.

THE ROLE OF THE BOARD OF DIRECTORS (contd.)

Hold the board, its committees, and directors accountable for the fulfillment of the assigned fiduciary duties and oversight functions. Approve dividends, financing, capital changes, and other extraordinary corporate matters.

Oversee the sustainability of the company in creating long-term shareholder value and protecting interests of other stakeholders.

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