The management principles of the board define how a board runs its business. They govern the relationships between the company’s Board of Directors and how it oversees corporate issues that cannot be delegated to lower-ranking executives.

Therefore, the board is accountable for many things that cannot be adequately accounted for in a company’s annual report. For example the board has to recruit and select a CEO. They must also ensure that the company operates in its best interests, and relay concerns to shareholders. The board’s job is to evaluate the capabilities of the company and potential.

Many boards conduct annual assessments to improve their performance. These assessments can focus on the board as a whole, the board’s committees, directors’ specific directors, or even the chair.

Another standard practice is to keep a record of all meetings. This helps the board understand how its actions affect others like employees and investors. A properly written set of minutes can be valuable evidence for legal proceedings.

The board must also be able to determine and assess risks. This means identifying the company’s weaknesses and preparing plans to prevent or mitigate them. This involves assessing the effect of possible changes on the communities and other stakeholders. The board must also be kept informed of major developments as quickly as possible. For instance the board should be aware when CEO compensation is getting out of hand compared to the performance of the company as well as average worker pay.

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