Board Members

Board members are professionals on the Board of Directors (BOD) panel that are appointed by shareholders to represent their interests and supervise management. They administer the company by instituting comprehensive strategies and launching planned targets. Moreover, the members usually meet and discuss the firm's performance at regular intervals.

They serve as the governing body for an organization. While public companies are lawfully obliged to induct salaried board members roles, the non-obligatory privatized and charitable firms generally have the BOD. Moreover, their legal obligations differ according to states and types of organizations.

• Board members are experts incorporated in the BOD by shareholders to represent their best interests and oversee the management.
• There are two types of members, namely, internal and external board members. The former handles the company’s internal operations while the latter engages with its external audience.
• Their responsibilities include crisis resolution, counseling and guidance, hiring and evaluating senior management, and establishing company values, mission, and vision.
• The members hold positions like the chairperson, vice-chairperson, treasurer, secretary, executive director, lead director, and independent director.

Board members form management plans, make decisions regarding key business affairs, safeguard the shareholders’ interests, and govern the enterprise. Moreover, the firm’s regulations decide the number of members, election procedure, meetings frequency, functions, and abilities.

Board members roles incorporate the representation of management’s or shareholders’ best interests, and thus, the BOD entails both internal and external members. The former depicts the opinions of employees and internal shareholders. Conversely, the latter manages the interests of clients and target audiences.

To clarify, board members jobs involve:

• Designing options policies
• Generating dividend policies
• Offering discipline value
• Organizing payment for executives
• Recruiting and terminating senior officers
• Guiding mergers and acquisitions
• Sustaining company assets
• Assisting managers and their teams
• Crisis resolution
• Ensuring the company is well-equipped with essential tools

The Board of Directors typically acts as the fiduciary to confirm the security of shareholders’ assets and a good Return on Investment (ROI) through proper management. In addition, they determine regulations during their meetings for complete corporate governance and oversight. In the US, the annual average board members salary is $1,18,214.

Though committee members oversee the entire company management, some functions preferably have independent committees like compensation or audit committee.

Please note that the roles of board members for non-profit or commercial organizations do not follow a fixed structure. Instead, it relies upon the shareholders, the corporation, and the niche. 

Here are the BOD’s top members:

#1 - Chairman

Also labeled as “chair,” “chairperson,” or “president,” it portrays the leader of an enterprise who predetermines the vision of the BOD. They preside over board meetings to ensure its orderly and seamless functioning. Often, the Chief Executive Officer (CEO) acts as a chairman.

#2 - Vice-Chairman

Alternatively called “vice president,” this role is immediately junior to the chairman and hence, is served in its absence. It assists the chairperson and is also considered a chairman's successor, thus termed as “chairman-elect.”

#3 - Treasurer

The designation portrays the in charge of treasury as responsible for the care, receipt, and distribution of finances. They observe the overall financial management of a company along with sales, fundraising, funding, commercial reporting, and monetary budgeting and planning.

#4 - Secretary

A secretary is an official administering the correspondence, records, and all the associated affairs of a corporation. They are recruited to perform authorized tasks like typing letters, arranging meetings, and making important phone calls to clients or shareholders.

Also, the BOD comprises an executive director, lead director, independent director, de facto director, celebrity director, and nominee director.

Here lie a few examples to comprehend the concept.

Example #1

Say that a mega corporation’s shareholders appoint board members as:

1. Izzy as Chairperson
2. Jack as Vice-chairperson
3. Katherine as Treasurer
4. Nash as Secretary

And the list goes on with crucial designations like executive directors, lead directors, and so on. So now, let’s explain the relevant duties of the top 4 BOD positions.

Izzy is the head of the company who sets its vision and ensures that everyone functions appropriately to serve the same. Being the vice-chair, Jack assists Izzy and manages everything in her absence. If she abruptly resigns, or the BOD terminates her, Jack is supposed to act as the interim or (if required) permanent president.

Katherine is answerable for every penny coming in and going out of the organization. In addition, she plans financial policies, assures their compliance, and optimizes the firm’s monetary assets for assured success. Lastly, Nash conducts the official functions like typing letters, arranging meetings and phone calls, and sustaining relevant corporate reports.

Example #2

Shortly a day after Elon Musk disclosed the latest $3 billion position in Twitter as its largest shareholder (9.2% of company shares), the company decided to put him on its board. Its CEO Parag Agrawal shared the news on Twitter.

Musk’s directorial term will last till 2024 and, as per the new agreement, he can only obtain up to 14.9% of the firm. Furthermore, Musk has earlier expressed his desire for Twitter to employ better free-speech laws, decrease moderation practices, and become more decentralized.

Lastly, here are some pivotal duties that come with board members jobs:

#1 - Guidance And Suggestions

The members mainly act as counselors and consultants to the firm’s management. Moreover, they are certainly knowledgeable enough to offer beneficial guidance within the deadline after conducting a brief and mild examination. Occasionally, their advice can cause a review or alteration of the management’s decision. 

#2 - Crisis Management

In case of the president’s sudden demise or disability, BOD is accountable for the heir selection procedure. Additionally, the job profile of board members for non-profit and profit organizations may include asking an inept or unethical president to resign and determining the successor. This assures the effortless functioning of the business. 

#3 - Formulate Company Purpose, Values, And Vision

The members confirm that its values, vision, and mission align with its management activities. They design the mission statement and ensure that everyone connected with the company (indirectly or directly) is aware and works for the same.

That is to say, the BOD ensures that the employee and audience actions match company values to attain wealth maximization. 

#4 - Recruit And Assess the Senior Management

Board officials recognize, hire, and evaluate executive management designations. They inspect their strengths, weaknesses, and requirements to appoint the best possible chief executives with the desired skill set. Additionally, they assess their performance to ensure that their choice is on-point.

This has been a guide to Board Members and its meaning. Here we explain the roles and responsibilities of board members for non-profit and commercial firms. You can learn more from the following articles –

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