A board of directors is an entity that governs and protects the long-term interests of its shareholders. Made up of highly skilled individuals with a variety of skills, a well-functioning board is essential for any business.
Traditionally, boards have overseen management teams, while also accepting strategies proposed by executives of companies. Today, however a well-designed board of directors can provide proactive leadership on key issues such as corporate strategy and vision managing risk and opportunities in addition to innovation, talent sustainability, and succession to leadership.
The company’s board is typically comprised of both outsiders and insiders. An outside director is a person who is not employed by a firm. To qualify as an independent director, the person must not have any connection to the company.
When putting your board together, think about people who are passionate about the mission of your business and have extensive experience in the industry. It is also important to have a mix of people with varying skill sets that can contribute to creative problem solving as well as innovative and strategic thinking. You should also look for individuals with specialized expertise such as finance, marketing and capital raising.
It is important to realize that you’re legally responsible and have fiduciary obligations as board members. Additionally, if you’re shareholder, you are entitled to the right to vote on board members during the proxy season. If you’re thinking of voting for a board member, be sure you go through their proxy documents carefully and ensure that they are independent.