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In a publicly-traded corporation, the board of directors is the one who decides what the company does. The board members are chosen by shareholders (the owners) to represent them and watch out for their interests. The board hires executives to manage day-to-day operations in accordance with the guidelines of the board.

The main function of the board is to ensure that a business doesn’t take risks with its shareholders’ or investors assets. It establishes guidelines for dividends, approving or denies hiring or firing high-level executives, amends corporate regulations, and conducts an annual shareholders’ meeting.

Generally, the board is composed of inside directors who also serve as officers of the company, and outside directors who do not hold executive positions. The chairman of the Board is in charge over the meetings, determines agendas, and delegates tasks to the members. Certain boards have permanent committees, such as the compensation and audit committees. These committees are typically required by law or are listed on the stock exchange.

Boards have to balance the need examine the details of their reports regularly with their responsibility to concentrate on the bigger picture and not on day-to-day management. It is also important that boards understand the specific duties it is required to and wants to carry out itself as well as those it should delegate over to senior management. Boards often make a list of reserved powers to clearly define which activities are the sole responsibility of the board, and which ones can be delegated to senior management.