How does a Board of Directors align the interests of CEO/shareholders and other stakeholders given the...

How does a Board of Directors align the interests of CEO/shareholders and other stakeholders given the legally the #1 role of the BOD is to make a profit for the owners or shareholders?

Expert Solution

The Board of Directors play a very important role in aligning the structure of the organization, offering discipline to operations and acting as counsellor or advisor to the higher management.

* The long term goals and setting the direction and pace to achieve the long term objectives is the responsibility of the Board of Directors.

*In order to make profit for the owners or shareholders it is the responsibility of the Board of Directors to set the mission for the project based on which the Managers and Senior executives formulate the strategy.

* Most importantly, the Board of directors act as an intermediary body between the company and the external world whether it is the government or other companies. Hence, the financial decisions for the company like deciding on the resources needed for the complete project, or distribution of profits amongst the shareholders based on the reserves and revenue of the company is also the responsibility of the Board of Directors.

Thus to make sure, owners or shareholders are in profit, the Board of directors handle both the outside and internal worlds for the Organization. From streamlining the processes of the company and strategies, to taking the most important decisions for the company.

keosha answered 1 year ago

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