The executive committee is a subcommittee within the board of directors, an organise’s governing body, which oversees management and establishes the company’s strategy. Members are elected by members or shareholders, and regularly meet to review the financial performance of the company, establish policies, and choose senior managers. It is also the governing body which ensures the compliance with good governance practices.
Executive committees, unlike the full board, are smaller groups that have close ties to their leadership. They are able to meet rapidly and at short notice in order to discuss important issues, like urgent issues in the workplace, high-level strategic decisions, as well as organisational supervision. They are usually accountable for ensuring that board members are aware of their responsibilities and roles and also take the lead in delivering effective governance practices training. They could also be responsible for appointing a new CEO, conducting CEO performance reviews, and reporting to the board.
The executive committee is the steering wheel of the board, and it decides the issues it will prioritize. However, it is important that the executive committee is completely transparent with the rest board on its decisions, and is in compliance with the board’s guidelines. To achieve this, it is recommended that the executive committee be a permanent committee of the board, with a fixed term of office and formal terms of reference. This makes it easier for the entire board to discern when an issue has been addressed by the executive committee, as opposed to when it still requires the full board’s attention.
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