Question

Describe the board structure (such as the board size and the ratio of independent directors of your firm) and suggest any way to improve board structure.

Answer 1

A board of directors (B of D) is an elected group of individuals that represent shareholders. The board is a governing body that typically meets at regular intervals to set policies for corporate management and oversight. Every public company must have a board of directors.

Elected by the shareholders, the board of directors is made up of two types of representatives. The first type involves inside directors chosen from within the company. This can be a CEO, CFO, manager, or any other person who works for the company daily.

Directors attend board meetings, evaluate management performance, tend to major decisions (such as making acquisitions or selling the company), declare dividends, create stock-option policies (including approving grants to key managers) and establish executive compensation packages. Boards of directors often have several committees dedicated to specific decision-making processes. For example, the compensation committee constructs the executive compensation packages and brings them before the full board for a vote; the audit committee evaluates and hires the company's auditors after bringing its research and judgment before the full board; and the finance committee evaluates merger bids or potential sources of capital.

Directors are elected by the shareholders usually once a year and usually at the annual shareholders' meeting. In most cases, directors have staggered terms, meaning that they will not all be up for re-election in the same year.

1. Recognise that good governance is not just about compliance.
2. Clarify the board's role in strategy. .
3. Monitor organisational performance. .
4. Understand that the board employs the CEO. .
5. Recognise that the governance of risk is a board responsibility. .
6. Ensure the directors have the information they need.