A public board is the governing body of a publicly traded company. Similar to private boards, public boards are responsible for setting the overall strategic direction of the company and performing fiduciary, administrative and advisory functions.
Structure of a public board
The general structure of public boards includes:
The board chairperson is responsible for overseeing meetings, representing the board to external stakeholders and ensuring good governance.
Individual board members, including executive and non-executive independent directors, bring expertise in their respective areas to help govern the organisation.
The executive leadership typically includes individuals such as the chief executive, operating, technology and financial officers. These are senior executives with key leadership positions, responsible for overseeing the company’s day-to-day operations.
An executive committee (if created) is a subset of the board of directors and functions under the supervision of the full board. It is typically composed of the chairperson, vice-chair, CEO, lead independent director and committee chairs.
Public boards often establish committees to prioritise specific areas of oversight, including audit, compensation, finance and nomination committees. These committees report to the full board and operate under its direction.
Differences between a public board and a private board
While general rules and responsibilities are much the same for private and public boards, the latter must follow more stringent procedures and requirements due to higher liability. Here are the key differences:
- Public boards experience extensive regulatory requirements and oversight. They must adhere to the financial reporting standards, disclosure requirements and governance laws. Private boards are more flexible and not subject to the same transparency requirements.
- Public boards often have to deliver short-term results to keep the shareholders satisfied, influencing decision-making and strategic planning. Private boards, however, are more flexible as they are answerable to themselves.
- Public boards, often larger than private boards, comprise a mix of independent directors and executives to prioritise unbiased decision-making. Private boards, however, often have a higher percentage of insiders — those directly associated with the company.
Public boards are accountable to a wide range of stakeholders. These include the shareholders, creditors, regulatory bodies, government authorities and the general public. The knowledge that each decision can significantly impact the broader community adds to their liability.
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