Board management principles are best practices which help boards https://contactboardroom.com to fulfill their purpose of governance. They include the use of annual assessments to evaluate the board’s performance, the appointment of an independent chair, the inclusion of non-management directors in CEO evaluations, and the use of executive meetings for discussions of sensitive issues such as conflicts of conflicts of interest.
A board is accountable to act in the best interest of the company, and its shareholders in the long run. Therefore, while a board should consider the views of shareholders, its responsibility is to use its own judgment independently. A board should also assess the potential the long-term and short-term risk for the company’s value creation and weigh them when considering the effectiveness of corporate decisions and strategies.
There isn’t one universal model for board structure and composition. Boards should be prepared to experiment with different models and think about how they could 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 can result in boards that are a bit insular and ineffective in addressing risks and challenges facing the company. Boards must be aware that the growing focus on governance, environmental and social (ESG) concerns of investors requires them to be more flexible than in the past.