The Board Management Principles are a set of best practices that aid boards to fulfill their goals of governance. They include the use of annual assessments to assess a board’s performance, the appointment of an independent chair, the inclusion of nonmanagement directors in CEO evaluations as well as the use of executive meetings to discuss sensitive issues, such as conflicts of interests.
A board’s duty is to take actions that is the long-term best interests of the company and its shareholders. So, while a board should consider the views of shareholders, its duty is to exercise its own independent judgment. A board must also examine the possibility of both long- and short-term risks to the company’s value creation and weigh them when reviewing corporate strategies and decision-making.
As a result, there is no one-size-fits-all model for a board’s structure or composition. Boards should be willing to try different models, and consider how they might 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 could result in boards that are too closed and ineffective in addressing the risks and challenges that a company faces. Boards must www.contactboardroom.com/how-to-organize-work-with-the-data-room-software also be aware that investors are placing more focus on environmental social, governance and social issues (ESG). This requires more flexibility.
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