The principles of management for boards are a set of best practices that help a board achieve its governing mission. They include the use of annual assessments to evaluate the board’s performance, the appointment of an independent chair, the inclusion of non-management directors in CEO evaluations and the use of executive sessions for discussion of sensitive matters, such as conflicts of conflicts of interest.

A board must be accountable to act in the best interests of the company, and its shareholders in the long run. While a board must consider the opinions of shareholders, it is responsible to exercise its own judgment independently. A board should also look at the possibility of short- and long-term threats to the company’s value creation and weigh them in reviewing corporate strategies and decision-making.

There is no universal model of board structure and composition. Boards should be willing to test different models and consider how they might impact their overall effectiveness.

Some boards are prone to adopting a geographic or special-interest-group representation model in which each director is perceived to represent the views of individuals located in a particular geographical area. This can lead to boards that are too insular and are unable to address the risks and issues that a company faces. Boards must be aware of the fact that investors are placing greater focus on environmental, governance and social concerns (ESG). This requires greater flexibility.