Board Management Principles
Board management principles are a set of best practices that help the board to fulfill its mission. These guidelines include the use of annual assessments to assess the performance of a board, the appointment an independent chair, and the inclusion non-management directors in CEO evaluations. They also include the use of executive sessions to discuss sensitive topics, like conflicts of interests.
A board has a responsibility to act in the best interest of the company and its shareholders over the long run. Thus, while a company’s board should consider the views of shareholders, its obligation is to use its own independent judgment. The board should also assess the potential risks that www.contactboardroom.com/corporate-governance-what-is-it could affect the company’s ability to create value in the short and longer term and consider these aspects when evaluating the effectiveness of corporate decisions and strategies.
There is no universal model for the structure of boards and composition. Boards must be prepared to try different models and consider what they could do to improve 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 too insular and unable to effectively address the challenges and risks facing the company. Boards must be aware that the increasing focus on environmental, social and governance (ESG) concerns of investors requires them to be more flexible than they were in the past.