What is a board of directors?

A board of directors is a panel of people who are elected to represent shareholders. Every public company is legally required to have a board of directors. Nonprofits and many private companies, while not required to have a board of directors, may elect to have one to help govern and guide the organization.

What type of board does a company have?

For publicly traded companies, boards typically comprise executive, nonexecutive, and independent directors elected by shareholders. This is known as a one-tier board structure. The board of directors often includes the CEO and sometimes the CFO of the company.

Who are external members of a board of directors?

External members of a board of directors are individuals who are not employed by the company or organization. External members may include investors who have funded the company, or independent members. Independent board members are often chosen for their expertise in a particular industry or field or for their experience in corporate governance.

What role does a board of directors play in culture?

And one of the responsibilities of the board of directors is to role model culture, says McKinsey senior partner Frithjof Lund. By promoting people according to stated values and fostering lifelong learning, boards can model the type of culture they want to see throughout an organization.