MANAGEMENT is efficiency in climbing the ladder of success; LEADERSHIP determines whether the ladder is leaning against the right wall - Stephen Covey

Friday, September 16, 2005

The board is key to good corporate governance

An effective board of directors, properly constituted, is the linchpin of good corporate governance. Boards are responsible for managerial performance in meeting the stated objectives of the corporation, compliance with applicable laws and regulations, and protection of shareholder rights.

How the board BE constituted
The board should be composed of qualified individuals of integrity with a diversity of experience. At a minimum, qualified means a good working knowledge of corporate finance. Each board member should be able to devote sufficient time to his/her duties and responsibilities

Boards should be composed of a substantial number of independent directors. Boards should disclose to their shareholders and stakeholders their criteria for independence. Board committees on compensation, audit, and nominating should consist only of independent directors. Executive sessions of the board should also be comprised only of independent directors.

For family-owned business, outside directors are essential to "ask the hard questions" of family owners, where the relationship between the business and the family may be blurred.

Board responsibilities SHOULD include:
1) Approve a core philosophy and mission
2) Monitor and evaluate corporate performance
3) Monitor and evaluate corporate strategy
4) Review and approve material transactions not in the course of ordinary business
5) Determine executive compensation
6) Evaluate senior management performance
7) Manage Executive Director/CEO succession
8) Maintain legal and ethical practices
9) Communicate with shareholders
10) Evaluate board performance


Blogger Trevor Gay said...

Good luck with your new site Sriram - I like the design

Keep it simple :-)

I agree Governance is important


Passion, energy and love are ESSENTIAL

6:43 PM

Blogger Sriram said...


Absolutely! I totally agree with U. Without passion, energy & love, no matter what governance system is in place, it wouldnt deliver the expected results. I remember a quote "Love ur work so that u dont have to work a single day"

6:46 PM


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