The Ideal Board of Directors

The Ideal Board of Directors A WORD FROM THE MANAGER PAULO VASCONCELLOS

he continuity of a company should 5) Does the board receive on a timely assembly tool. It is at this moment that it The board of directors will truly create be management’s chief objective. basis the information needed to ensure it becomes essential to consider the board’s value if it is aligned with best corporate TIn its role as the shareholders’ is in control of the company and of its ideal size, the mix between in-house and governance practices. This involves representative, it is the duty of the board executives? independent members, the formation of clearly defining the board’s role, an of directors to ensure that the 6) Does the board have sufficient time committees, and separation of the appropriate structure, with the right organization takes full advantage of and knowledge to analyze and take tough positions of Chairman of the Board and people and processes in place for each opportunities and fulfills its obligations to decisions? CEO. The company’s position, the board member to give of his/her best. its representatives, customers, suppliers, 7) Do the board members enjoy the complexity of its area of activity, the style associates, and the local community. The independence crucial to decision making? and ability of its board will aid in Paulo Conte Vasconcellos is a board’s efficiency and effectiveness are If the answer to any of these questions defining the degree of dedication required professional board member and partner of not measured solely by its compliance is no, it would be advisable to consider of each director and the ideal number of ProxyCon Assessoria e Participações. Email: [email protected] with legislative requirements or best forming a new board of directors. board members. corporate governance practices; further Defining the board’s role is the first While structure is the best and most This article reflects the author’s opinions action is paramount. step towards an effective board. A important basis on which to begin and not those of the Valor Econômico At this time, when Brazilian board’s three chief tasks are: to monitor, forming a board of directors, it is vital to newspaper. The paper accepts no companies are holding their annual to decide, and to advise. The board must select and retain the right people. In responsibility, nor can it be held general meetings and many are in the monitor the performance of the company Brazil, “old boy network boards” are now responsible, for the above information or process of electing their board members, and of its executives. Regrettably, the a thing of the past, but we still have too damage or any nature arising from the use of such information. it is worth reflecting on the factors that majority of Brazilian boards of directors many “celebrity boards” whose aims are enable a board of directors to perform to devote a goodly portion of their meetings more institutional than value creation its full potential. to analyzing past performance rather than oriented. However, over the past few We begin with a short evaluation of a discussing the future. years, we have seen increased company’s board of directors. Some of Topics involving important decisions professionalism among board members, the questions are: must always take first place on board with the presence of independent 1) Are the board members mindful of meeting agendas. The board must take executives who are very constructively their responsibilities and of the challenges the decisions involving plans or actions involved and who make positive faced by the company? that will forcefully impact the company. contributions to company results. 2) Are they aware of the key variables It should also be in a position to advise The last step is to take full advantage of the company’s performance and the the CEO who holds a solitary position of the board of directors. And how is this risks involved? and needs the board to share his ideas and achieved? By using the board’s time 3) Does the board dedicate sufficient to resolve problems. In defining their productively, providing quality and time to examining the company’s long- role, board members must ask timely information, encouraging the term objectives and the strategies in place themselves: 1) What do we intend to board to focus on the more important to attain them? achieve? 2) What are the realistic topics, developing improved monitoring 4) Does the board periodically review possibilities given our knowledge and processes, and more fully benefiting from the company’s organizational structure, time available? 3) What do we propose to meetings (less Power Point and more the performance of its executives, its create that is of value to the company and discussions!). At least 50% of meeting Human Resources policy, and analyze the the shareholders? time should be devoted to discussions need for possible future changes? With the role defined, the challenge with senior management about important becomes the blueprint and the structural matters impacting company business.