The principles of board management are a collection of best practices to help a board achieve its governing mission. These principles include the use annual assessments to evaluate the performance of a board, the appointment an independent chair, as well as the inclusion of non-management directors in CEO check this site out evaluations. They also use executive sessions to discuss sensitive issues, like conflicts of interests.
The board’s obligation is to do what they believe are the best interests of the company as well as its shareholders. Consequently, while a board should take into consideration the opinions of shareholders, its obligation is to exercise its own independent judgment. A board should also examine the risks that could impact a company’s ability to create value in the short and long-term and weigh these elements when reviewing corporate strategies and decisions.
This means that there isn’t a universal model for a board’s structure or composition. Boards must be prepared to experiment with different models and think about the ways they can impact their overall effectiveness.
Some boards are prone to adopting a geographic or special-interest-group representation model in which each director is perceived to represent the views of individuals located in a particular geographical area. This could result in boards that are too closed, unable to address the risks and challenges facing a business. Boards should also be aware that the growing focus on environmental, social and governance (ESG) concerns of investors demands that they be more flexible than they were in the past.