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In corporate management the board of directors is the primary team that is responsible for the entire business. The board decides on vision, mission and goals and weighs in on things as strategic planning, mergers and acquisitions capital appropriations, operational budgets and the decision on compensation. The board is responsible for the hiring and dismissal of the CEO and setting executive pay rates and bonus payments, as well as profits sharing and employee stock options. Boards are usually arranged around committees which focus on specific functions. For example, the audit committee works with the company’s auditors. Meanwhile, the compensation committee oversees matters like the rate of pay and stock option grants.

The role of a board is to serve as the corporate conscience, making sure that homework is completed and that criteria are carefully considered before submitting them for approval by management. Some presidents with a strong sense of discipline utilize the board as a method in enforcing quotas and other performance measures and to evaluate the performance of their subordinate executives.

Directors rarely get involved in the management of policy at a lower level decision-making, but they have a strong role in establishing the major policies of the company. They make key decisions for the company, such as closing facilities. They decide how to invest the money of the company and establish long-term goals in terms quality, growth, finances and personnel. The board must also establish guidelines for its own conduct and deal with legal issues such as conflicts of interest directors’ independence, conflicts of interest the community benefit, and CEO evaluation.