Regardless of whether or not he or she is on the board, a CFO should help the board of directors better understand the company's strategy and define value creation in relation to past financial outcomes and forecasts of future financial performance. Losing even one board director places extra burden on the governance committee. In performing their duties, directors are specifically allowed by Section 5231(b) of the Law to rely on information and opinions prepared or presented by corporate officers or employees; counsel, outside accountants, and other outside professionals; and Board committees on which the director does not serve, so long as – This works both ways. Question: Who Should And Should Not Serve On A Board Of Directors (BOD)? Explain And Justify Your Response. Their financial ties to the company should be through their stock ownership, and they should own enough company stock that if they lost it, it would really hurt . Board of directors (BOD): Board of directors (BOD) is a team of people elected by an organization shareholders to represent their interests and make sure the managements acts on their behalf. Is Industry Experience Vital For A Successful Board Member? Should The CEO Or Other Insiders Be Allowed To Serve On The BOD? The loss of a board director may mean the loss of substantial volunteer hours that the organization has long depended on to do their work. A must-read for anyone who serves on a board. This article by Nora Rock (corporate and policy writer at LAWPRO) originally appeared in the May 16, 2014 issue of The Lawyers Weekly published by LexisNexis Canada Inc. Should A BOD Strive For Diversity In Its Members? In cases where the executive director has a seat on the board, it's important to have an effective conflict of interest policy. The founder may also sit on the board, but even founders serve at the pleasure of the board. Board independence "Interlocking directorates" Board members should be independent of management and they should not serve on each other's boards, shouldn't be consultants. The board has a duty to review the performance and set compensation for the chief executive and if necessary, censure or even terminate the chief executive. An employee who serves on a nonprofit board must wear two very different hats, and the potential for conflict of interest is high. It is not illegal for paid staff to serve on the Board of a nonprofit organization, although a few states such as California may limit the number or percentage of paid staff that may serve on the Board of a charitable corporation. In some organizations, the CEO is a board member and may even serve as the board chair. Lawyers should think carefully before accepting an invitation to serve on a client’s board of directors. 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