BOARD CHARACTERISTICS

Board Leadership – The effectiveness of board meetings depends

largely on the leadership ability of the chairperson to set an
agenda and direct discussions. The board agenda is usually
prepared by chairperson in collaboration with the CEO.

CEO Duality – implies that the company’s CEO holds both the
position of chief executive and the chair of the board of directors.
The are pros and cons of that model, but investors usually prefer
to separate the positions. If they don’t, then it is preferable that
the company’s board consists of a ‘substantial’ majority of
independent directors.

Lead Director – demand for Lead Director increased because of

the presence of CEO duality, resulting from growing concern that
duality places too much power in the hands of CEO, which may
impede board independence.
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Board Composition – in terms of ratio of inside and outside
directors, and the number of directors influence the effectiveness
of the board. A board size of nine to fifteen is considered to be
adequately tailored to the number of board standing committees.

Board Authority – is granted trough shareholder elections. SOX

substantially expanded the authority of directors, particularly
audit committee members, as being directly responsible for hiring,
firing, compensating, and overseeing the work of the companies’
independent auditors.

Responsibilities – the primary responsibility of the board of

directors that the companies assets are safeguarded and that
managerial decisions and actions are made in a manner of
maximizing shareholders wealth while protecting the interests of
other shareholders
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Resources – board of directors should have adequate resources to

effectively fulfill its oversight functions. Resources available to the
board consist of legal, financial, and information resources.

Board Independence – implies that, to be independent director

shouldn’t have any relationship with the company other than his or
her directorship that my compromise the director’s objectivity and
loyalty to the companies shareholders.

Director compensation – best practices suggest that increases in

stock ownership, reduction in cash payments, and charges in
compensation should be aligned with shareholders long-term
interest determined by board, approved by shareholders, and fully
disclosed in public reporting.