The board management principles define the manner in which a board conducts its business. They regulate the relationship between a company’s Board of Directors and how it supervises corporate issues that cannot be delegated to lower-ranking officials.
The board is therefore responsible for a variety of things that cannot be included in the annual report of a business. The board, for instance, must hire and recruit the CEO, ensure that the company is operating in its more best interest, and then communicate any issues that are of concern to shareholders. The board also plays an important role in assessing the potential of the company and its capacity.
Many boards are conducting annual reviews to improve their performance. These may focus on the board as it is, its committees, individual directors or the chair.
A common practice is keeping a written record for all meetings. This allows the board to know how its actions impact others, such as employees and investors. A well-written document can be a valuable source of evidence in legal proceedings.
Finally, the board must be able to recognize and assess risks. This includes identifying the weaknesses of the company and devising strategies to address or eliminate them from occurring. This also includes assessing the effect of any changes on stakeholders, such as communities. The board must also be kept informed of major developments as quickly as possible. For example, the board must know whether CEO compensation is out of control in comparison to the performance of the company as well as average worker wages.
