Question

How does a Board of Directors align the interests of CEO/shareholders and other stakeholders given the legally the #1 role of the BOD is to make a profit for the owners or shareholders?

Given what you know now is the governance of your company best described as ‘pilot’ or ‘watchdog’? Support your response.

Answer 1

It is the responsibility of the BOD to align the company decisions and strategies with the interests of the company management, shareholders and other stakeholders. They can do so by proactively evaluating every policy and decision made in the interest of the company and making sure it aligns with the interests of these stakeholders too. They focus on maximising the shareholder value by balancing the business profits with the stakeholders' profits.

Giving the shareholders an insight of the business decisions and actions helps to ensure this alignment of business interests and shareholders interests. They can provide the shareholders with the minutes of the meetings held, short term and long terms plans of the company and the audit statements of the company to fulfil their responsibility of loyalty towards them. This way they can keep their #1 role to make profits and also align the interests of the stakeholders with this objective.

The governance of my company will be described as "pilot" because the board takes an active role in directing and implementing the policies and strategies and monitoring and evaluating the performance of the business. The board in this governance makes sure that business decisions are in the best interests of the business and stakeholders involved. They are active in initiating strategies and implementing systems. Such a board can take the most effective decisions keeping them beneficial for all and check on the business operations to align with the same approach.