The board of directors makes decisions about who to hire and fire, especially at the level of executive management. The chief executive officer, the chief financial officer and other executive managers are hired, evaluated and fired following decisions by the board. The board decides who the most qualified people are to maintain the objectives of the company and to generate capital and profits.
The board of directors makes strategic decisions about the direction a company should take. Examples of such decisions include budgets, allocation of resources, executive compensation, financial strategies such as acquiring another company (acquisition), entering into a merger and working with venture capitalists. These decisions can positively or negatively affect the company's overall financial status and are deliberated thoroughly.
The board makes decisions on behalf of shareholders. The management and distribution of profits in the form of dividends is an important decision. The board determines how the dividends will be distributed among shareholders. These decisions are justified to the shareholders in an annual general meeting (AGM).
The board of directors not only determines the missions and policy of a company, but also makes decisions on issues affecting these policies. Changes or amendments to company policies are major decisions that affect the direction of the company. These decisions include policy on corporate governance, corporate social responsibilities, occupational and environmental policies, policy on fund-raising and fiscal policy.
The board makes decisions about how to manage litigation regarding lawsuits in which the company is involved. The board of directors is presented with the responsibility of determining the best settlement option and strategies during the pretrial, trial and appeal stages of a lawsuit. With the help of an attorney, the board makes decisions about the chances of winning, how much should be spent in the legal process, what type of resources are required and whether to negotiate.