Board Director Role

In a business environment, a board director is someone who is responsible for the conduct and management of a company and its affairs. All of the directors of a company are collectively referred to as the board of directors and often one of them is appointed to the role as chair of the board of directors. In many cases, the control of a company is divided between the board of directors and the shareholders.

A major role for a board director is protecting the shareholders' assets. They act to ensure that the shareholders receive a respectable return on their investment. The board of directors is the ultimate governing body within the management structure of any publicly traded company. Another board director role is to collaborate with the other board directors to perform CEO assessment, approve appropriate Compensation Governance for the CEO, assess and pay dividends, approve the company's financial statements, and recommend or discourage acquisitions and mergers.

A board director is also expected to fulfill the role of establishing the audit and compensation committees. The role of the audit committee is to ensure that the company's financial statements and reports are accurate and utilize impartial and fair estimates. The board usually selects, hires, and works with an outside auditing firm to do this. The role of the compensation committee is to set base compensation, stock option awards, and incentive bonuses for the company's executives, which includes the CEO.

In most companies and organizations, the board is made up of individual board directors who are elected by the shareholders to work in their role for specified terms. Some companies operate on a rotating system so that only a fraction of the directors are up for election each year, which makes it difficult for a complete board change to take place due to a hostile takeover. In most cases, a board director can have a vested interest in the company; can work in the upper management of the company; or can be independent from the company but are known for their business abilities.

A very important thing to remember as a board director is to treat the company as a completely separate entity. A company has its own legal rights and obligations and can even take its own actions against you and others if required. The following list outlines a few of the roles of a board director to keep in mind:

• Always act in the best interests of the company and in good faith at all times.
• Be certain that you are using the powers bestowed on you by the company for their proper purpose.
• Make sure there is no conflict of interest between you and the company by fully disclosing to the board of directors all of your interests relating to transactions or shares held.
• Never deal in your own interests rather than the company's when dealing with company business and property.
• Attend as many board meetings as possible and make sure you are aware what is happening with the company at all times.
  

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