https://scoreboardroom.com/nonprofit-board-pay-equity
Effective corporate governance requires that all stakeholders have clear and defined roles and obligations. It also helps promote an environment for work that promotes diversity and fairness. These frameworks can be used by a variety of organizations, from large corporations to professional associations and families.
The board is responsible for establishing and approving corporate plans which create sustainable long-term values choosing the CEO and directing management in the administration of the business; allocating capital for investment and assessing and managing risk and setting the “tone at top” for ethical conduct. The board usually comprises a mixture of insiders, like major shareholders, founders, and executives. They are also joined by independent directors with expertise in directing or managing large companies. Independent directors are considered to be beneficial in governance because they don’t have the same connections to insiders which can lead to conflicts of interests.
Board composition is critical because board members face complicated and often technical issues that require many perspectives from all sides. Governance experts recommend that a board comprised of at least a majority independent directors. In addition, tenure and diversity play a role in ensuring the board is functioning effectively, especially when discussions are long and filled with strong opinions. Board members who are new can bring fresh perspectives while those with more time on the job can provide continuity and know-how of the institution.
Finally, the board is responsible for reviewing, understanding and directing the annual operating plans and budgets. Furthermore, the board through its corporate governance committee and nominating committee, must engage in regular shareholder outreach to learn about and understand the opinions of shareholders who are major and communicate regularly with them on the most important issues that concern the company.