A board of directors is a group of people who represent the interests of a company’s shareholders. Board members (directors) are nominated by a committee and elected by shareholders.
A company’s board of directors sets policies and advises the executive team on strategy, executive compensation, dividends, resource management, social responsibility and other matters. Every board member is expected to use their position to advance the financial interests of the company while remaining objective and free from conflicts of interest. Board members are also expected to keep corporate information confidential and uphold the company’s code of conduct.
Ideally, a board will include both management and non-management personnel, each elected for a specific time period. Many companies aim to have board members’ terms begin and end at different times to avoid coinciding vacancies and the need to fill multiple positions at once.
The structure, composition and operating requirements of a board of directors are spelled out in a company’s bylaws.