Private Company Boards

Abstract

The board of directors of a company functions as stewards of the company, whether public or private. The responsibilities of a board of directors of a private company include, but are not limited to: 1) selection and oversight of the company’s management, 2) setting strategy and monitoring the company’s financial performance and forward-looking business planning, 3) setting executive compensation and adopting benefits programs, 4) preparing the company for a future IPO or sale, and 5) identifying, ameliorating, and monitoring the risks associated with the company’s business activities. To fulfill these responsibilities, the current trend is for private companies to implement a more formalized governance structure for the board of directors, in many cases similar to those implemented by public companies.