Chapter 2 The board Flashcards
Functions and characteristics of the board of directors :
Functions :
- control
- Provision of resources
Characteristics :
- size
- independence
- diversity
Key responsabilities of the board of directors
- Selecting the CEO
- Tone at the Top
- corporate strategy & monitoring
- Risk appetite & management process
- Allocating Capital
- Reviewing operating plans, budget and business resiliency
- compliance program
True or False : The board of Directors Focusing on the integrity and clarity of the company’s financial reporting and other
disclosures about corporate performance.
TRUE
Nominating directors and committee members, and overseeing effective corporate
governance. its a key responsabilities of Who ?
The Board of Directors
Functions of The Board of Directors :
- Providing Legitimacy & Public Image
- Expertise
- Advice and counsel
- Deal with Stakeholders
- access to resources
- External relations
- Important firm decisions
What is Board Capital ?
Human capital & Relational or Social Capital
What is the 3 Board’s Structures ?
- Unitary board
- Two-tier board
- Mixed system
Explain the Unitary Board structures
Single Board of Directors comprising Non-Executive and Executive directors
Explain the Two-tier board structures
Management board & Supervisory board (non-executive directors only)
True or False ?
The chairman is the highest-ranking officer of the corporation and the main
representative
TRUE
Main functions of the CHAIRMAN is:
- objective judgement
- ethical leadership
- Chair the board and general meetings
- Succession planning
- effective decision- making processes of the board
- Promote company culture
- Build relationship between NED and ED
- effective communication with shareholders
Who is in charge of initiate regular reviews of the board and its committees ?
The Chairman
The CEO are responsable of :
Business operations
Strategic planning
Capital allocation
Identifying, evaluating and managing risks
Accurate and transparent financial reporting
Who is in Charge of Selecting qualified management, establishing an effective organizational structure
and ensuring effective succession planning ?
The CEO
What is a Non-executive Chairman ?
It’s when the positions of CEO and chairman are not
combined and are not carried out by the same person.
What is the Advantages of a Non-executive Chairman ?
- clearer separation between the board and management
- eliminates certain conflicts
- Clear authority to one director
- CEO have time to focus on the strategy
Disavantages of non-executive chairman ?
- can make recruiting a new CEO difficult
- Duplication of leadership & internal confusion
- Costs decision
Lead Independent Director key responsabilities :
- Point of contact for shareholders & stakeholders
- balanced understanding of major shareholder issues and
concerns. - Link between independent directors
- Replaces the chairman in the event of absence
Who Assist the chair with the process for the selection of a new chair, as appropriate,
and chair the Nominations & Corporate Governance Committee when agreeing the
recommendation to the board for the chair’s successor ?
The Lead Independent Director
True or False : The secretary need to be a lawyer
False,
Who act like a “legal advisor”
The Board Secretary
Approximative size of a Board ?
between 5 and 15 members
Why Director independence is critical to effective corporate governance ?
Because, ID providing
objective independent judgment
Did Diversity of the Board only refer to Gender and ethnicity ?
NO, The composition of a board should reflect a diversity of thought, backgrounds, skills,
experiences and expertise
