In order to successfully achieve its objectives and mission, a company needs to have a good management team as well as an excellent Board. Quality of a Board plays an essential role in determining the potential of a company. A company with experienced and skilled Board members is generally more preferred by investors. While investing in a company, many investors do investigate the qualification, skills and experience of a Board member and then make their decision accordingly.
Role of the Board
Overall organisational performance: One of the major roles of the Board is to ensure that a company develops and implements strategies and policies to enable it to achieve the overall objectives.
Overall compliance/conformance: Board must also ensure that a company develops and implements systems, processes and procedures to enable it to comply with its legal, regulatory and industry obligations
Role of Board (Source: Australian Institute of Company Directors, model by Professor Robert Tricker)
Board’s role in strategic Planning- Although, the level of board contribution to strategic thinking and planning may vary according to the organization, in many small companies the Board itself may play a more instrumental role in support of management in the development of strategy prior to its submissions to the board for approval.
Board’s role in the organisation’s governance- A company’s Board has a very important role in Corporate governance as well. As Corporate governance is becoming very important for organisations, with some studies indicating strong correlation between organisational performance and corporate governance, the responsibilities of Board in relation to the Corporate Governance has increased a lot.
Responsibilities of Board:
- Providing strategic direction to the company and deciding upon its strategies and objectives in conjunction with the CEO;
- Monitoring the operational and financial position and performance of the company;
- Assuring a prudential and ethical base to the organisation’s conduct and activities having regard to the relevant interests of its stakeholders;
- Driving company’s performance so as to deliver member value or benefit;
- Monitoring the strategic direction of the company and the attainment of its strategies and objectives in conjunction with the executive;
- Overseeing and evaluating the performance of the CEO, and through the CEO, receiving reports on the performance of other senior executives in the context of the organisation’s strategies and objectives and their attainment;
- Appointing and, where appropriate, removing the CEO, monitoring other key executive appointments, and planning for executive succession;
- Assuring that the organisation’s financial and other reporting mechanisms are designed to result in adequate, accurate and timely information being provided to the Board;
- Overseeing the design, implementation and periodic review of appropriate and effective policies, processes and codes for the organisation, which depending on the organisation, may include with respect to ethics, values, conduct, securities trading, disclosure of securities’ price sensitive information, employment, remuneration, diversity and otherwise;
Skill set of a Board Member
For a company, it is very important to select board members who have sufficiently broad experience and have some core skills that should be represented on a board as a whole. As per the Australian Institute of Company Directors these core skills include:
- Strategic expertise – the ability to set and review strategy through constructive planning, questioning and suggestion;
- Legal skill – the ability to understand and oversee compliance with numerous laws;
- Managing risk – experience in risk management and mitigation principles;
- Accounting/Financial literacy – a director should have the ability to read and comprehend the accounts and the financial material presented to the Board;
- Human resource skills – Director of a company must have sufficient experience in human resource management;
- Marketing and communications – experience in media and marketing;
- Industry knowledge – experience in similar organisations or industries;
- Information technology – there is a growing need for directors with an understanding of information and communication technology
Board changes are usually done by companies to increase the overall skillset as well as the total experience of the Board. However, a Board change could be a result of someone resigning from a post or a company’s decision to let go of someone. One company which has recently undergone a Board change is Elders Limited.
Elders chairman Michael Carroll Resigns from his position
Michael Carroll, the chairman of Australia’s leading agribusiness Elders Limited (ASX: ELD), recently decided to step down from his position. Ian Wilton, the current Chairman of the Audit, Risk and Compliance Committee (ARCC), will step into the shoes of Michael Carroll, and Ms Robyn Clubb will replace Mr Wilton as Chairman of ARCC.
Who is Mr. Ian Wilton?
- Accountant with extensive experience across the agricultural sector as both a Non-Executive Director and Senior Executive;
- Non-Executive Director of the company since April 2014;
- Member of the Work Health and Safety Committee, the Nomination and Prudential Committee and the Remuneration and Human Resources Committee;
- Held Chief Financial Officer positions with the sugar division of CSR Limited, Ridley Corporation Limited and GrainCorp Limited and was President and Chief Executive Officer of GrainCorp Malt;
- Also Chair of the advisory board of MacKays Banana Marketing.
- Education: MSc, FCCA, FCPA, FAICD, CA;
NAB Appointed Ross McEwan as new CEO
Recently in July 2019, one of Australia’s leading banking group, National Australia Bank (ASX: NAB) announced the appointment of New Zealand-born, former Australian banking industry executive Ross McEwan as Group CEO and MD.
NAB believes that Ross McEwan is the ideal leader for NAB as he brings a compelling range of experience across finance, insurance and investment.
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