In a publicly traded business, the board of the company is the body of people who decide what the company does and the reasons for it. The shareholders (owners) elect its members to represent and protect their interests. The board appoints the executives who manage the day to day operations according to the direction of the board.
The primary role of the board is to make sure that a company doesn’t put at risk its investors or shareholders assets. It establishes policies for dividends and payouts, appoints or disapproves the hiring or firing of high-level managers, changes corporate rules, and conducts the annual shareholders’ meeting.
The board consists of both inside directors as well as directors from outside. The chairman of the Board preside over the meetings, determines agendas and delegates tasks to their website the members. Some boards have permanent committees such as the compensation and audit committees. These committees are usually mandated by law or are listed on the stock exchange.
Boards must balance the need to review the information they have on a regular basis with their responsibility to concentrate on the bigger picture and not on day-to-day management. It is also crucial that a board understand what duties it must and wishes to perform itself and which tasks it should delegate over to senior management. It is common for boards to devise a schedule of reserved powers that clearly states which duties are solely the responsibility of the board and what they can delegate to senior management.