Board of Directors-CG-Week3

Board of Directors-CG-Week3 - BoardofDirectors:Dutiesand...

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Board of Directors: Duties and  Liabilities CG- Week3
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Examine the duties and liabilities that come with  directorship.  Overview of the role of the board and the  requirement for independence.  Review the basic operations of the board. This  includes evaluating the process by which topics  are selected, deliberated, and decided.  Review the process by which directors are elected  and removed.  Learning Objectives
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A document titled  “Principles of Corporate  Governance” , the Organization for Economic  Cooperation and Development (OECD) lays out a  vision of the responsibilities of the board: The corporate governance framework should ensure the  strategic guidance of the company, the effective  monitoring of management by the board, and the board’s  accountability to the company and the shareholders. Board Responsibilities 
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From this we can conclude that the board is  suppose to perform two functions: Advisory  Oversight  In an  advisory capacity :  The board consults with management regarding the  strategic and operational direction of the company.  Attention is paid to decisions  that balance risk and  reward.  Board members are selected based on the skill and  expertise they offer for this purpose, including previous  experience in a relevant industry or function. Board Responsibilities (Con’t) 
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In an  oversight capacity : The board is expected to  monitor management  and  ensure that it is acting diligently in the interests of  shareholders.  The board  hires and fires the chief executive officer measures corporate performance,  evaluates  management contribution to performance , and  awards  compensation It also oversees legal and regulatory compliance including the audit process, reporting requirements for  publicly traded companies, and industry-specific  Board Responsibilities (Con’t) 
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The responsibilities of directors are  separate  and  distinct  from those of management.  Directors are expected to  advise  on corporate strategy  but do not develop  the strategy.  They are expected to ensure the  integrity of t he  financial  statements  but do not prepare the statements  themselves.  The board is  not an extension  of management. It  is a governing body elected to represent  the  interests of shareholders . Board Responsibilities (Con’t) 
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Board of Directors-CG-Week3 - BoardofDirectors:Dutiesand...

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