The board of directors in corporate management is the only group that has the ultimate responsibility for a business. The board determines the vision goals, mission, and values and is also involved with strategic planning, mergers and acquisitions operating budgets, capital budgets, compensation decisions and other issues. The board is responsible for the hiring and firing of the CEO and also for determining executive pay rates and bonus payments, as well as profit sharing and employee stock options. Boards are usually organized around committees that are focused on specific tasks. For instance the audit committee collaborates with a company’s http://www.netboardroom.com auditors while the compensation committee is responsible for issues like salary rates and stock option grants.
The job of a board is essentially to act as the corporate conscience, ensuring that homework is completed and that criteria are carefully considered before submitting them for approval by management. Some presidents with a strong sense for discipline use the board as a means for imposing quotas, other performance indicators, and to gauge the performance of their subordinate executives.
Directors aren’t involved in the managerial decisions that are at the lower levels, but they play an important role in the formulation of major policies for a company. They make important decisions that will have a profound impact on the company for example, closing facilities, for example. They decide on how to invest the money of the business and establish long-term goals in terms of quality and growth, finances and personnel. The board must also establish guidelines for its conduct and deal with legal issues like conflicts director independence, community benefits, and CEO evaluation.