The structure of a Board of Directors (BOD) or board of trustees is one the most crucial factors in determining an the success of an organization. A well-organized Board will make sure that each member understands their role and how they can accomplish it. It will also help the business or organization achieve its goals.
In essence, the board supervises the executive board of a firm or organization and decides the direction for the firm. The board is also accountable for the selection and removal of the CEO, determining CEO pay, determining the compensation of other executives within the company, and taking important strategic decisions.
External or independent directors are compensated for their participation. They are non-executive board members that do not hold executive positions within the company. They bring a different perspective to the board, and are usually subject-area experts within the industry that the company operates in.
A two-tiered board consists of a management board made up of company executives, and the supervisory board that is composed of independent directors. The supervisory board is responsible for making sure that the management’s decisions are carried out in compliance to corporate laws and policies.
A advisory or consultative board is comprised of individuals who have a stake in the business. These include investors or customers. The advisors can provide insight to the top executives of a company and offer diverse perspectives that might not be available within the company itself. They can also help find potential growth opportunities and help with the implementation strategies that meet a company’s goals.
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