The principles of board management are best practices which help a board to achieve its purpose of governance. These principles include annual assessments to assess the performance of an organization, the appointment of an independent chair, as well as the inclusion of non-management directors in CEO evaluations. They also include the use executive sessions to discuss sensitive issues, such as conflict of interest.
A board has a duty to act in the best interest of the company, as well as its shareholders, over the long-term. While a board is required to consider the views of shareholders, it’s also responsible for exercising its own independent judgment. A board must also assess the potential both long- and short-term risks to the company’s ability to create value, and weigh them when making decisions and strategies for the company.
Therefore, there is no one-size-fits-all model for a board’s structure and composition. Instead boards should be willing to experiment with various models and ponder how each might impact the effectiveness of the board overall.
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 can lead to boards that are too insular and unable to tackle the issues and risks facing a business. Boards must also be aware of the fact that investors are putting www.contactboardroom.com/how-to-organize-work-with-the-data-room-software more focus on environmental social, governance and social issues (ESG). This requires more flexibility.