Board of directors
Definition
A Board of Directors is a group of individuals elected to represent shareholders and oversee the activities and direction of a company. They set broad policies, make significant decisions, and hire senior executives like the CEO.
5 Must Know Facts For Your Next Test
- Board members are typically elected by shareholders at annual meetings.
- The Board of Directors has fiduciary duties to act in the best interests of the shareholders.
- The board often forms committees such as audit, compensation, and governance committees to handle specific tasks.
- Independent directors are those who do not have a material relationship with the company beyond their directorship.
- The Chairman of the Board may be separate from the CEO in some companies to ensure a balance of power.
Review Questions
- What are the primary responsibilities of a Board of Directors?
- How are members of the Board typically chosen?
- Why might a company choose to separate the roles of Chairman and CEO?
"Board of directors" appears in:
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Related terms
CEO: The Chief Executive Officer is responsible for managing the overall operations and resources of a company.
Shareholders: Individuals or entities that own shares in a corporation and thus have an interest in its performance.
Fiduciary Duty: The legal obligation for one party to act in the best interest of another party, such as between board members and shareholders.
