The selection and rating of the chief executive officer and junction with the CEOs selection and evaluation of the corporations top management team is credibly the most important function of the board. In its broader sense, selection and evaluation includes considering compensation, planning for succession and, when attach, replacing the CEO or separate members of the top management team.
The motion of the CEO should generally be reviewed at least annually without the presence of the CEO and other(a) inside directors. The board should subscribe an understanding with the CEO with observe to the criteria according to which he or she will be evaluated, and in that location should be a process for communicating the boards evaluation to the CEO.
Boards have a responsibility to ensure that compensation plans are appropriate and competitive and properly reflect the objectives and performance of management and the corporation.
incentive plans will vary from corporation to corporation and should be intentional to provide the proper balance between long- and short-term performance incentives. Stock options and other equity-oriented plans should be considered as a meaning for linking managements interests directly to those of stockholders.
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