Resources

by Brian Cavataio 03/24/2021

There has always been a certain mystique about how corporate boards are constructed.

In broad terms, corporate boards are guided by the bylaws set in place to oversee and approve annual budgets, make sure there are adequate resources to run operations, elect the chief executives, and provide general oversight on behalf of shareholders and any entity with a stake in the company.

The board is also responsible for verifying the availability of future capital-raising sources and reviewing the business practices of their most senior leaders.

But who selects the board members, and how can it be ensured that the right individuals are chosen in the best interest of the company?

If you want to join a board, Harvard Law School wrote about the changes happening and how someone could join a corporate board.

Key Takeaways

• Corporate boards are responsible for approving annual budgets, ensuring adequate operational resources, electing or dismissing executives, and providing general oversight
• Most boards are composed of high-level managers and executives of other companies, academics, and some professional board members who sit on multiple boards
• The primary goal of a board is to ensure that management is acting in the best interests of shareholders
• Board members nominate candidates for the board via proxy mailings on who they feel will be best for the company
• Traditionally, the issue with nominating a board is that shareholders have had little to no say in electing a board
• The SEC allows investors and shareholders to nominate board members by placing them on the proxy ballot mailings before they are mailed out.