In corporate management the board of directors is the primary team that takes on the responsibility of the whole company. The board makes decisions on vision goals, mission, and values, and also weighs in with strategic planning, mergers and acquisitions operating budgets, capital budgets, compensation decisions and other matters. The board is responsible for the hiring and firing of the CEO and setting executive pay rates including bonus payments, profit sharing, and employee stock options. The majority of boards are arranged around committees focusing on specific functions. The audit committee, for instance, works with the company’s auditors. The compensation committee is responsible for issues related to salary and stock options.
The job of a board is to serve as the corporate conscience, making sure that homework is done and that the criteria are contemplated before they are proposed to management for approval. Some presidents who have a strong sense of discipline utilize the board as a way to enforce quotas, other performance measures and to evaluate the performance of their subordinate executives.
Directors are not typically involved in lower-level management policy decisions, but they play a crucial role in establishing big policies for the company. They make key decisions for the company, including closing facilities. They decide how to invest the funds of the company and establish long-term goals in terms quality growth, financial stability and employees. The board must also establish guidelines for its own conduct and should address legal issues such as conflicts of interest directors’ independence, conflicts of interest the community benefit, and CEO evaluation.