3.1.1 Composition
Composition
The composition of the Board of Directors can vary depending on the size and nature of the company. Generally, a well-constituted board includes a mix of executive and non-executive directors.
Executive Directors are members of the company's management team, often including the CEO and other senior executives. They are involved in the day-to-day operations of the company and bring operational insights to the board's decision-making process.
Non-Executive Directors are not involved in the daily management of the company. They provide an independent perspective and are critical in ensuring that the board's decisions are unbiased and in the best interest of all stakeholders. Non-executive directors can be further classified as independent and non-independent directors.
Independent Directors are those who have no material relationship with the company other than their directorship. Their independence is crucial for objective decision-making, free from potential conflicts of interest.
Non-Independent Directors may have ties to the company, such as major shareholders or representatives of a parent company. While they bring valuable insights, their decisions may be influenced by these relationships.
A diverse board composition, including gender, age, experience, and expertise, is often considered beneficial. Diversity brings a range of perspectives, enhances problem-solving, and improves the board's understanding of various stakeholder needs.